OPEC quotas may have small impact

Significance

OPEC's decision to try to agree new quotas for its members, albeit with key exemptions, suggests a fragile consensus is growing around a change in policy direction towards cooperation.

Impacts

• Perceptions will strengthen that Saudi Arabia is prepared to change strategy.
• A framework and platform for future action should allow OPEC to reassert its cartel position.
• Agreement on quotas is unlikely to reduce export volumes much, limiting the impact on prices.
• The prospect of a deal will see further additions to the US rig count, with implications for US oil production in 2017.
• If prices rise, encouraging more investment, and Libyan and Nigerian output recovers, OPEC output could rise even if quotas are imposed.