Saudi Energy Minister Khalid al-Falih (L) and Russian Energy Minister Alexander Novak at a meeting of OPEC and non-OPEC members. Photo: Amer Hilabi/AFP/Getty Images

The big energy market news over the weekend was OPEC and Russia agreeing in Vienna Friday to curb output by 1.2 million barrels per day compared to October levels.

Why it matters: The decision to curb output starting in January quickly boosted prices a bit, though they remain far below where they were 2 months ago.

  • The global benchmark Brent crude initially shot up by $3 per barrel Friday before giving back about half that ground.
  • Prices are heading back down again on Monday morning to roughly $61, and are still far below the $86 reached in early October.

What they're saying: A number of analysts see the cut tightening the market enough to send prices back up next year by roughly $10 per barrel from where they were before the deal.

  • "We think the OPEC+ deal sets a platform for prices to recover towards USD70/b. While we can’t rule out downside from here we think it now looks far less likely, and we would expect continued OPEC intervention if it were the case," HSBC analysts said in a note Monday.

But, but, but: There are all kinds of caveats here. Bloomberg writes this morning, "Oil’s gains risk being quelled by uncertainty over how the OPEC+ coalition will implement its deal to cut output, according to Goldman Sachs Group Inc. and Morgan Stanley."

A couple of experts are warning that OPEC and Russia's new deal is simply triage, and that the cartel is facing much larger and existential challenges.

1. Nick Butler of King's College London writes in the Financial Times that Qatar's recent decision to abandon OPEC is a sign of fundamental problems and loss of influence.

  • "Wisdom begins with a cold-eyed acceptance of reality. Opec is not the power it once was," writes Butler, a former BP executive.
  • "For Qatar, and several other countries, the implication is that they will have to look after themselves in a world where the old methods of controlling prices by restricting production no longer work," he adds.

2. Council on Foreign Relations' Amy Myers Jaffe has a post that looks at OPEC's position in light of the rise of U.S. shale and the emergence of alternative technologies that have put peak oil demand on the eventual horizon.

  • Her piece covers a lot of ground, and I won't try to capture it all here. Overall, she argues that "OPEC’s mission is starting to look increasingly anachronistic."

Go deeper: Russia, OPEC agree to cut oil production

Go deeper

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