OPEC in driving seat though oil price volatility persists: Al Rajhi Cap

Oil prices will continue to remain volatile, but is likely to be tilted slightly upwards, as OPEC will continue to manage prices, Al Rajhi Capital said in its latest report on Tuesday.

"OPEC’s role continues to be of paramount importance as it clinched an agreement to cut oil supply. Despite the delay in achieving the cut it shows OPEC still has the ability to control balance in the global market," the report noted.

"In the past, strong unity and record compliance among OPEC and their allies (especially Russia), coupled with rising demand have helped them to achieve their objectives."

Last week, OPEC and non-OPEC members decided to impose a cut of 1.2 million barrels per day (mbd), effective from Jan. 2019 for an initial period of six months. The cut is, however, greater than the approximately 0.5 mbd export cut exemption from Iran.

"Hence, the oil supply-demand balance is likely to be maintained from January 2019 and over time we could see shortage increasing as Iran import waivers get over in April next year," the report added.

The next OPEC meeting will be held in April 2019, which will help OPEC+ to take future course of action post the end of waiver period, the consultancy said.