OPEC’s Discounts on Heavy Crude Oil: Is a New Policy Instrument Taking Shape?
Earlier this year in Caracas, OPEC announced that it would leave its production quota unchanged. However, not everyone is convinced by OPEC’s recent announcement. Some observers believe that OPEC members have already reduced their supplies to keep inventories in check and they are doing this by not discounting their heavy crude oils. This comment explores the argument that OPEC may resort to reducing discounts on its heavy oil to reduce oil supplies in what is believed to be an oversupplied market.