OPEC gathered at its 175th meeting on December 6 in Vienna. It had some tough decisions to make, and its oil ministers were undoubtedly keeping an eye on the much larger jamboree taking place in Katowice, Poland running December 2-14. The message from the COP 24 Climate Change conference will be that the world needs to do more to decarbonise and sooner — or face environmental catastrophe.
The announcement made by OPEC was a larger than expected cut of 1.2 mpbd; but the news from COP 24 will carry longer-term significance. Both organisations are essentially looking at two sides of the same coin, but with conflicting agendas and time horizons that are steadily converging.
Firm oil demand growth
Regardless of its latest decision, OPEC can rest fairly easy in one respect. Leading economic indicators may suggest fragility in the world economy, but the demand outlook for oil remains relatively firm nonetheless.
The 90-day trade war truce agreed between the U.S. and China at the G20 meeting in Argentina December 1-2 provided an immediate boost to both business confidence and oil prices, only to see stocks fall again a few days later as the markets realised this was indeed a truce rather than the end of the war.
However, the IMF is still predicting global GDP growth next year of 3.7%, and an average annual increase out to 2023 of 3.64%, slightly higher than the 3.56% seen for the period 2013-2018. Despite buoyant sales of electric vehicles, and the competitiveness…