Cheating on OPEC-led output cuts difficult to track
But the reality that the committee - and the oil market at large - faces is that any cheating on quotas is unlikely to become fully apparent until several months into the six-month deal, which begins January 1, Platts reports.
OPEC has agreed to use the six independent sources its analysts have adopted to track production in the organization's monthly oil market reports.
Those secondary sources - which include S&P Global Platts - compile monthly estimates of each country's output for the preceding month. So, production in January will be reported by the secondary sources in early February.
The market will clearly be watching those February reports for the first signs of noncompliance, but it could take a few months before more definitive trends emerge, since the quotas are meant to be an average of production over the six months of the deal.
Despite this and OPEC's historical "tendency to cheat," as former Saudi oil minister Ali al-Naimi recently put it, the market has responded bullishly to the deal, sending prices up some 18% since November 29, the day before OPEC met in Vienna and finalized its 1.2 million b/d in cuts.
Eleven non-OPEC countries, led by Russia, followed up with 558,000 b/d in committed cuts on December 10. ■