2 Reasons Why OPEC Oil Freeze ‘Lacks Credibility’

10/03/16 01:06PM EDT

Editor’s Note: Below is a brief excerpt from an institutional research note written by Hedgeye Potomac Senior Energy Policy analyst Joe McMonigle and Commodity analyst Ben Ryan. For more information about our research contact sales@hedgeye.com.

2 Reasons Why OPEC Oil Freeze ‘Lacks Credibility’ - OPEC cartoon 08.24.2016

The constant newsiness and lack of credibility around a speculated production freeze has been well covered by our energy policy analyst, Joe McMonigle. Below we raise two important points.

With regard to a quota revision in the near-term:

  • First, a topic we’ve harped on before - OPEC quotas have had no bearing on actual production levels historically – the only impact has been a short-term spot price impact.
  • The fundamental story at play is one that questions the timing of speculated revision in quotas – why would OPEC freeze production now that they’re winning the global market share game for the first time in a long time? Saudi Arabia has alluded to U.S. Shale being a barometer for forward-looking policy.

2 Reasons Why OPEC Oil Freeze ‘Lacks Credibility’ - opec v shale

**For more, watch McMonigle discuss recent OPEC developments in the video, "OPEC’s ‘Risky Gambit’ (What The Media Totally Missed)."

https://youtu.be/DDkyld_WeWk

© 2022 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.