(Bloomberg) -- Compliance has always been OPEC’s big problem. The new approach - requiring those that don’t comply one month to make up any shortfall in subsequent months - sounds fair in principle, but there’s no guarantee that offenders will actually reform their ways, and the organization doesn’t have the tools to compel them to do so, as we’ve pointed out.
Relying on secondary sources to monitor production levels leaves plenty of room for dispute by members who say the numbers are wrong. Nigeria has done just that already with the May numbers, while Iraq has pleaded special circumstances to explain its own lack of full compliance. It’s all very well to extract promises of deeper cuts to compensate past failures, it’s going to be quite another thing to enforce them.
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