Four Possible Scenarios to Watch for at OPEC's Meeting in Vienna

(Bloomberg) -- OPEC and its allies are edging toward extending their production cuts beyond the current scheduled expiration in March, almost certainly until the end of the 2018.

But the outcome of an OPEC meeting is never certain until it’s over and the nuances of every deal matter a lot. Oil traders will scour the final communique to gauge the strength of the group’s continued commitment to reining in global oil supply. Here are four possible scenarios based on conversations with officials gathered in Vienna this week:

1. Extension for nine months until end of 2018: This is the outcome Saudi Arabia is pushing for, and it’s not usually a good idea to bet against the Saudis at an OPEC meeting. The cuts roll over until the end of next year with no opportunity to review, apart from the meeting in June that is scheduled to happen in any case.

2. Extension for three months with option to renew for a further six: Potentially the most bearish outcome, OPEC would try to assuage Russian concerns about overheating the oil market by leaving renewal of the production curbs for the June meeting.

3. A 12-month deal starting in January: one possibility is that the deal will be "reset" to start in January, allowing more non-OPEC countries to be brought into the pact. Probably the most bullish scenario.

4. Adding an exit strategy: It’s possible that OPEC might roll over the cuts until the end of next year, but add some language on how the group will engineer a “soft landing” for the oil market once supply and demand are back in balance and inventories are drained to the five-year average targeted by OPEC.

--With assistance from Nayla Razzouk Elena Mazneva and Angelina Rascouet

To contact the reporters on this story: Will Kennedy in London at wkennedy3@bloomberg.net, Wael Mahdi in Kuwait at wmahdi@bloomberg.net, Grant Smith in London at gsmith52@bloomberg.net.

To contact the editors responsible for this story: Tina Davis at tinadavis@bloomberg.net, Will Kennedy at wkennedy3@bloomberg.net, Carlos Caminada

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