By Tyler Durden
Ever since the OPEC production cut deal was announced last year in Vienna, there have been two key wildcards fascinating the oil trader and analyst community: what would be the deal compliance (in other words, how pervasive would cheating be), and which country would break away from the deal first. When it comes to the former, after an impressive run in which compliance hit and in some months surpassed 100%, mostly due to Saudi Arabia shouldering the extra production cut burden, in June it finally slid back to 92%, the lowest in months, and the first indication that the recent Saudi rising production is starting to weigh on the cartel members who are growing concerned that the Saudi commitment to production cuts may be waning.
As for the first country to defect, the odds were always highest on Venezuela, however as of today that has turned out to be a losing wager because as Argus reported, Ecuador’s oil minister said the cash-strapped country faces a “difficult economic situation” and is no longer able to comply with its pledge to Opec to cut 26,000 b/d of oil production.
Today’s announcement comes after the small Latin American nation had strictly followed …read more