The International Energy Agency is now wondering what we had discussed earlier in the week: OPEC’s discipline is fraying.
The Agency believes that OPEC members are beginning to cheat because oil prices have risen from $32 earlier this year in part due to OPEC’s coordinated cuts. However, when prices are $60 a barrel, discipline is harder to manage as the incentives for overproduction is higher.
The IEA said:
Uneven compliance by a few members and Angola’s plea for an exemption [to its quota] threaten to chip away at Opec’s otherwise strong resolve to rein in oversupply.