Possible impact on supply in the event the OPEC/non-OPEC cut agreement were to be extended into H2 (see Market Watch– Issue 2)

  • Compliance with the cut agreement among the OPEC-10 group remained high in February and crude output was lowered by 1.1 million b/d vs. the October reference level.
  • While our base case would not assume a roll-over of the cuts after the next OPEC meeting, we explore a potential scenario.
  • In this ‘prolonging the cut’ scenario we take into account somewhat waning compliance over time, and we would expect the OPEC-10 group to produce some 880,000 b/d less in H2 compared with our base case.
  • We think the non-OPEC parties would cut to a lesser extent, but still some 190,000 b/d lower compared to our base case.
  • This could potentially add an extra 130,000 b/d to our base case US shale supply outlook as a result of increased prices resulting from the extended cuts.