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Unless you’ve been busy reading Mark Zuckerberg’s Harvard speech, you should know that members and non-members of the Organization of the Petroleum Exporting Countries (OPEC) have just concluded their much-awaited meeting in Vienna.

What happened during the meeting?

If you recall, members and non-members made history back in November when they agreed to reduce their collective daily oil output from 33.7 million barrels per day (mb/d) to 32.5 mb/d for six months starting January 2017.

However, they qualified that the deal could be extended by another six months depending on “prevailing market conditions and prospects.”

Fast forward to the end of May when there’s no significant rebalancing in the oil market and Black Crack prices have barely improved from their pre-OPEC deal days.

This is why it was no surprise that the “Vienna group” has extended its deal by another nine months. After all, Saudi Arabia and Russia have already announced that they would do so earlier this month, while the Joint Ministerial Monitoring Committee (JMMC) has recommended the move before the meeting.

Saudi Arabia’s Energy Minister Khalid al-Falih was pretty satisfied with the decision, saying that (emphasis mine):

“We considered various scenarios, from six to nine to 12 months, and we even considered options for a higher cut. But all indications discovered that a nine-month extension is the optimum.

OPEC has also welcomed Equatorial Guinea into the fold effective immediately, which means that a total 14 OPEC members and 10 non-OPEC members have pinky-sworn to extend their oil production cut deal from July 2017 to March 2018.

There are no deets yet as to the exact distribution of production cuts now that Equatorial Guinea is in the cool table.

However, we do know that Libya and Nigeria continue to be exempt from the deal while Iran, which was allowed to ramp up its production, retains its output target.

For now, Al-Falih is confident that oil stockpile reductions will accelerate in Q2 3017 and that the nine-month extension will “do the trick” in bringing down inventory levels even as he expects a “healthy return” for U.S. shale.

How did oil prices react?

About as “optimal” as you would expect. If you’re an oil bear, that is.

Thanks to OPEC members’ speeches and jawboning, as well as Saudi Arabia and Russia announcing their nine-month output cut extensions before the Vienna meeting, market players began to expect more results from the meeting.

Some had expected deeper cuts to the tune of 2 million bpd, while others believed that OPEC would extend the deal for as long as 12 months.

15-Minute Charts of USD/CAD and Oil Prices
15-Minute Charts of USD/CAD and Oil Prices

Not surprisingly, oil prices clocked in their biggest slide since March 8. Brent crude oil fell 4.6% lower to $51.46 per barrel, while WTI crude futures dropped by 4.8% to $48.90. That’s the first dip below $50 this week, yo!

What now?

If Al-Falih was right and that the extended deal will “do the trick,” will this mean that it’s back to pump-all-you-can business for major oil producers in 2018?

After all, he did say back in March that Saudi Arabia’s game plan involves restricting oil output for a spell “with the aim of accelerating rebalancing, and then allowing the free market to work.

Problem is, this plan doesn’t encourage price stability. Unless OPEC presents some kind of exit strategy, market players will price in an oversupply in 2018 and maybe for oil to return to its $30/barrel prices.

In the meantime, OPEC seems to be on plan “yolo,” with Al-Falih saying that “we’ll do whatever is necessary” and that “we’ll cross that bridge when we get to it.