Oil: Prices firm post OPEC agreement - BBH

Research Team at BBH, notes that the oil prices are firm after yesterday's OPEC agreement as many seem prepared to respect the price action and not resist the higher oil prices, but many are skeptical of the implementation, which does not begin for another month.

Key Quotes

“Saudi Arabia is perceived to have blinked.  It agreed to cut its output by almost 500k barrels a day, while its rival Iran was allowed to boost output slightly (90k barrels a day).  That would bring Saudi output to 10.1 mln barrels a day, which incidentally is its average output from the end of last year through April of this year.  Iraq failed to resist pressure for output cuts despite claiming it should be exempt due to its battle against ISIS.”  

“If OPEC agreed to almost a 1.2 mln barrel a day cut, most driven by about a 4.5% cut in member's output, non-OPEC is supposed to deliver a 600k barrel cut.  Next week there will be meetings with OPEC and non-OPEC countries.  Conflicting reports suggest Russia could phase in 200k-300k barrel cut over the course of the first several months of next year.   Getting many other non-OPEC countries to participate actively may be difficult.  Mexico, for example, quickly indicated it would not cut output.”