Oil prices spiked on Friday on news from Vienna.
OPEC+ managed to pull off an eleventh-hour agreement, checking all the boxes after a contentious set of meetings. There were a lot of competing interests at play, but the agreement offers a little bit of everything, enough for all parties to walk away satisfied.
The headliner is the 1.2 million-barrel-per-day (mb/d) cut beginning in January, with a review scheduled for April. OPEC will shoulder 800,000 bpd of the total, and non-OPEC countries will take on the other 400,000 bpd. The baseline used to measure the cuts is October production levels.
The cut is larger than some analysts had expected, especially given the rumors swirling on Thursday about a cut of around 1 mb/d. In fact, one could argue that the group cleverly managed market expectations, lowering them on Thursday only to surprise the market with a larger cut on Friday. Prior to the meeting 1.2 mb/d might have been considered a middle-of-the-road cut, but after the seemingly tumultuous set of meetings on Thursday and early Friday, a 1.2 mb/d cut ends up looking like a highly successful result.
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