OPEC has a deal to make a deal but it could fall through
OPEC members have pledged to cut collective production to somewhere in the 33.0 mbpd to 32.5 mbpd range. What they haven't done is agree who will be cutting and by how much. Instead, they have struck a committee to study it and make recommendations ahead of the November 30 OPEC meeting.
So what's the chance that it all falls apart?
Extremely low.
I'm confident on November 30 that quotas will be revealed. The leaders will smile and say bullish things about oil and their heroism in working together.
Why won't it fall apart?
It helps to understand OPEC and its history. It's a voluntary cartel and it has no authority to enforce quotas. In the past, they have been routinely flouted and violated without consequences. In practice, it's little more than a public relations effort.
So even if countries don't intend to follow a quota, they will still accept the agreement. The alternative is that walking away would lead to an instant drop in oil prices. If they pretend, prices will be supported and there is a good chance that some of the members will play along.
So there is absolutely no downside in agreeing to a quota.
