Next month’s gathering of oil ministers from OPEC and non-member countries is fixating traders. But the real re-balancing in the market is already underway — and much of it is taking the form of involuntary production cuts from OPEC members.
Speculation that the meeting in Doha will lead to a production freeze has been a boon for oil, helping to drive a 40% rise in Brent since the idea was first mooted just over a month ago, to more than $42 a barrel.
But a freeze would be empty gesture. None of the countries that intend to take part, with the possible exception of Saudi Arabia, was expected to raise production in any case.
Most OPEC countries are already producing at capacity, while output in Russia, the biggest producer outside OPEC, is expected to fall over the course of 2016 as ageing West Siberian deposits aren’t replaced. Read more