OPEC and some non-OPEC producers agreed to extend a supply-curbing pact to 2018 on 25 May, but there are concerns that this might not be enough to tilt the market back into balance.
US shale production will remain untied by OPEC’s decision, with the country remaining adamant over exempting itself from any collective supply agreement, prompting doubts about the lasting impact of the extension.
Barrels either from the US or from other exempted countries like Nigeria and Libya may jeopardise OPEC’s own efforts. The International Energy Agency (IEA) said in its May monthly report it remains to be seen whether this newfound optimism on the part of traders will stay.
Oil industry experts are torn on whether or not the market will be more affected when the agreement is eventually scrapped. Following OPEC’s announcement of the cut’s extension, oil prices fell as the decision was met with disappointment from those who expected deeper cuts. But the same question lingers: Will the oil output cut extension be enough?