The first monthly OPEC+ meeting to decide on the group’s production ended with an unexpected, in fact shocking two-month agreement: Saudi announced an unexpected and unilateral production cut of 1 mb/d in February and March, Russia and Kazakhstan will instead increase output modestly to meet seasonal needs while other producers will remain at their January levels. Of the three, the Saudi decision to cut production by 1 million barrels came as a shock to the market, sending oil sharply higher. What has behind it? As Goldman’s commodity strategist Damien Courvalin explains, despite this bullish supply agreement, Saudi’s decision “likely reflects signs of weakening demand as lockdowns return, with our updated 1Q21 balance actually weaker than previously.” That said, Saudi’s action and the prospect for a tight market in 2Q21, as the rebound in demand stresses the ability to restart production, will likely support prices in coming weeks, leading Goldman […]