We all know how the markets have got it wrong recently. I’m thinking about Brexit and Donald Trump’s election. Therefore, they may have got it wrong this time as well. Let me explain why.
Iran is signalling that they will sign-up to the OPEC oil price deal which will reduce output, but in order for that deal to stick, Russia needs to get on-board. Putin has a strong incentive to do this, just look at the Russian economy! However, if the oil price rises to $55 a barrel, the US will start fracking and turn on the Shale “taps”, the very thing that Saudi Arabia has been trying to prevent, a strategy which has cost them dearly, in every sense.
I’m not a betting man, although I did win a prize in a raffle the other week; I’m neither an Oil analyst nor an Oil market trader. I’m just a PR guy that works in the Oil and Gas industry. Yet, I for one have a sneaking suspicion that OPEC won’t get an agreement on Wednesday. It’s difficult to call, because at the end of the day it’s geopolitics that will drive the decision and not the market per se.