Oliver Klaus: I think the market needed a moment to kind of figure out what actually happened because a deal that was announced was essentially going back to 100% compliance which means for the group of OPEC and non-OPEC producers to go back to a cut of 1.8 million barrels per day.
In a bid to revive oil prices after they fell as low as $27 a barrel in 2016, OPEC and its allies struck a deal to cut oil output by 1.8 million bpd from the start of 2017. But it was not without a fight, and some arm-twisting from Riyadh and Moscow, OPEC sources said. The move is most likely in anticipation of the USA sanction on Iran that will severely tighten global supply, even though it was announced ahead of the State Department Action. American crude exports rose to a record 3 million barrels a day, according to the agency, while concerns remain involving the pipeline bottleneck in the Permian region.
It is true that USA shale producers are also producing at record levels, however even here there are capacity constraints, which means that the White House may have to decide whether it wants full compliance with its sanctions in the timescale stated, which seems unlikely, and a gasoline price heading up to $4 a gallon ahead of midterm elections, or whether they want to be more flexible, less a backlash from the USA consumer.
Japan has also made some sacrifices as it withdrew from the Azadegan oil field, one of the largest in the Middle East which Japan developed, due to the impact of US sanctions on Iran.
Iran had struck the JCPoA (Joint Comprehensive Plan of Action) deal with the U.S., the UK, Russia, China, France and Germany after years of negotiations.
"We have 24 countries in the agreement, they can always be 23", one of the OPEC sources said. It can pay for Iranian crude in yuan now, which will also work towards its goal to internationalize its currency.
The Saudi Arabian Oil Minister won the day by managing to paper over the cracks among Opec members and clinch a deal that appears to have satisfied everyone.
Officials in the ministries of external affairs, oil and finance are grappling with the import of Trump's latest statement on Iran sanctions.
But the real decisions on production policy are now being made bilaterally and outside the OPEC and OPEC+ structures.
Futures rose 1 percent in NY on Thursday.
"Removing this from the global market in a few months is not possible", the Iranian official said. "This is not about oil companies", said another oil company executive. "And how effective diplomatic channels are will determine the outcome of the issue for us", he said.
"Other countries, including those in Europe, are moving to obtain oil from different countries and areas".