With OPEC meeting this Thursday November 27th in which we are calling for a 500k bpd cut, we may actually have non-OPEC forces more involved than usual and we mean primarily Russia.
While not uncommon for both OPEC and no-OPEC forces to be in sync, Russia has historically made it clear they have no interest in following OPEC protocol and that their production and export targets are driven by their own structural realities and strategic interests.
According to a Kommersant newspaper report in the run-up to the Nov 27 OPEC meeting Russia may cut output subject to OPECs cut. The math here says Russia would cut one barrel for every approx. 6 barrels cut by OPEC.
Russia historically has been able to get the benefit of OPEC cuts (higher prices) without formally joining the program at specific points along the road. We get the sense now that with western sanctions biting hard and Russia a united front might be more intimidating to the west. This view may not necessarily be shared by Saudi Arabia but may be how Russia's Igor Sechin, CEO of Rosneft, feels he can attempt to use the momentum.
Russia has never been in a better position to enforce national compliance on production cuts in Russia with their ever increasing control over the sector.
All of this could leave many traders caught a little squeezed if you get any type of cut that exceeds the 500k bpd cut we are calling for. We think risk rewar4d into the meeting and into year-end for that matter, says oil is oversold versus macro fundamentals.