RE:RE:3 possible scenarios coming out of OPEC+@iluvyellowsnow: OPEC+ can revert back to the current DOC, but that is captured in Scenario 2. This would be very bullish for oil as that would mean no new barrels on the market from OPEC+.
Regarding Scenario 3, I think you are misguided in conflating what might happen this coming week and what happened in March 2020. The key difference is that in March 2020, there was no deal in place. Members were trying to come to an agreement and the Russians and the Saudis could not agree to the best course of action. The result was no deal and everyone drilled at will. That was very different than today. Today there is the DOC (Declaration of Cooperation) agreement in place until April 2022. The UAE is NOT asking for more barrels until April 2022. UAE's gripe is with the fact that OPEC+ is now asking all members to extend the agreement to December 2022. The UAE has said they would consider that only if their baseline allocation is raised. So if there is no agreement to extend, the logical conclusion would be that the revert back to the current DOC and not add additional barrels in August. This would likely spike oil prices as the market is currently in about 2.3 million b/d definict (as per Jeffrey Currie of Goldman Sachs).
Moreover, this is not a rift between the Saudis and the Russians like March 2020. The UAE wants more barrels, to which it feels entitled, but I seriously doubt they will go so far as to try to kill the DOC at the risk of alienating its regional allies -- specifically, Saudi Arabia.
Iluvyellowsnow wrote: Scenario 4: Opec+ reverts back to the original expiry date of the pact (i.e. April 2022). The Saudi's placate the UAE by giving up some of their own quota (100k-200k) until a new deal can be negotiated in April 2022..
The UAE has a problem with the pact being extended until the end of 2022. They wanted to renegotiate their baseline by the agreed upon April 2021 date. In the past and in order to get a deal the Saudi's have given up some of their production capacity to appease other Opec members, notably Russia. If the Saudi's had stuck to the original expiry date of the pact we wouldn't be in this mess. The UAE was in agreement with the 400k bbd proposal but not with the extension.
I think your scenario 3 is very possible. If no deal is reached the UAE would start to produce more and other members would probably follow suit. That's what happened last March when Russia and SA went their separate ways. Oil took a $15 a barrel dive in just one day. Yesterday CPG went down 5% when oil was STILL net positive $1.50. Imagine how low it will go if there is no agreement.