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Wall Street's best-known oil analyst says smaller nations may start 'cheating' the system if OPEC eases production cuts, and it could cause a fresh supply crunch

Wall Street's best-known oil analyst says smaller nations may start 'cheating' the system if OPEC eases production cuts, and it could cause a fresh supply crunch




Helima Croft, perhaps Wall Street's best-known oil analyst, said that the prospect of OPEC easing production cuts this week could allow smaller oil producing nations to break their commitments to cut.




"Once OPEC starts easing cuts, can they maintain the same level of conformity or will it start to break down when we start to have more barrels coming back?" — she said in an interview with Business Insider this week.




OPEC, Russia ,and other producers are meeting on Wednesday to decide whether to ease oil production cuts in August. They are expected to do so.




Croft fears that if those cuts are eased, then smaller producers in the cartel will start "cheating" and producing more oil than agreed.




This in turn would increase overall supply, unbalancing the market, and likely holding down prices.




Visit Business Insider's homepage for more stories.



Wall Street's best known oil analyst fears that the oil market could once again be flooded with excess oil in the coming months if OPEC+ agrees, as expected this week, to ease production cuts that have been in place for the last few months.
Speaking to Business Insider, Helima Croft, global head of commodity strategy at RBC Capital Markets, said that if production cuts are eased, that could open the floodgates for smaller OPEC members to break their commitments to cut supply. This in turn would likely imbalance the market.
In June, compliance with previously agreed cuts to oil production by OPEC+ was 108%, meaning producers in the cartel were pumping even less oil than agreed. This week, however, OPEC is set to agree to ease those cuts somewhat.
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