Takeaway: WIN-WIN: Saudi Arabia gets full year extension; Russia can tell its oil companies they are only committed to cuts through June.

REPLAY - FLASH CALL from Friday, December 1, 2017

Speaker: Joe McMonigle, Hedgeye’s Senior Energy Policy Analyst

Title: Audio Replay | Energy Policy: OPEC - The Day After and What's Next

Subscriber Link: CLICK HERE

REPLAY: Join Hedgeye’s Joe McMonigle who attended the OPEC meeting in Vienna this week for a Flash Call today to explain OPEC’s decision and other key dynamics at OPEC that may be catalysts in oil markets in 2018.

Going into the OPEC meeting Thursday, Saudi Arabia wanted an extension of production cuts for the longest duration but Russia, under pressure from its oil companies, wanted the shortest duration.

Therefore OPEC developed a brilliant compromise that is a win-win: a full year extension with a review in June. Saudi Arabia gets a win of an extension for a full year, and Russia can tell its oil companies they are only committed to cuts until June.

For the Saudis, the full year extension is critical because the Aramco IPO is planned for the 2H of 2018, and they want the production cut agreement to still be in effect during the IPO.

Minister al-Falih added at the press conference that he is “bullish, if I can use that word.” The man has a big IPO coming up next year.

However, in a case of bad timing, OPEC got some worrisome news just as the meeting had ended and before the ministers walked into the press conference Thursday night. EIA released its September monthly US crude production data showing a big increase to 9.48 million barrels a day. Talk about crashing the party. OPEC’s win-win may also be a win for US shale producers.