OPEC+ countries have started to relax the deal to curb oil output, Kommersant reports.
Major “black oil” producers have agreed on reducing the general quota from 9.7 mio to 7.7 mio barrels per day in August. This rule will be in place until the end of this year. For Russia, it is an opportunity to increase production by around 400K barrels per day.
Economist and Associated Professor at the Russian Academy of National Economy and Public Administration (RANEPA) Sergei Khestanov noted that the OPEC deal that was broken in 1985 resulted in a lengthy oil price decline that hit the Soviet Union quite hard.
“The current OPEC+ deal seems to be surprisingly steady. Does it mean they actually learned from history? Any cartel is potentially unstable. How long it can last is the intriguing part,” the expert warns. “Nobody has ruled out the prisoner’s dilemma.”
The prisoner’s dilemma is a game analyzed in game theory, according to which two rational players might not always cooperate with each other even if both will benefit from the outcome. Presumably, the prisoner (the player) maximizes his own win not caring about the others’ gain.