The OPEC strategy seems to be one of just ceding large amounts of share to the US, which ahead of this week’s meeting is hard to fathom.

You can see the material increase in US production (bottom left) and, not shown, other non OPEC member production, even as OPEC sheds ~2m bpd relative to pre-pandemic production (top right).

It seems very difficult to believe that SA would want to cut production even further. The oil price bounced hard over the weekend on the assumption that SA and RUS would increase/extend the size of their production cuts.

We don’t have any major oil exposure in our direct equity portfolios, and this is precisely the sort of event where you can look like a hero if you get it right. I feel I have minimal ability to read OPEC’s intent, perhaps even less trading geopolitical headlines in general, but I know uncompensated share loss when I see one, and that’s what’s happening right now.

Last thoughts; it doesn’t seem clear that it is politically salient to cut further. We remain underweight, for now.

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