When OPEC+ unveiled its bold move to tighten crude markets last week, the oil world was united in surprise. But on the merits of the plan, it’s starkly divided.
The shock decision, steered by Saudi Arabia, to delay again the restart of oil output halted during the pandemic is being lauded by many as a masterstroke of supply management -- and criticized by others as misjudged.
Vitol Group, the world’s biggest trader, said price indicators attest that “OPEC+ have control” of the market. Crude’s rally to a 14-month high is shoring up revenues for the cartel, while spurring Wall Street banks like Goldman Sachs Group Inc. and JPMorgan Chase & Co. to bolster price forecasts.
But others warn that the Organization of Petroleum Exporting Countries risks over-tightening crude markets by denying supplies just as demand recovers, sending prices too high.
It could also encourage a new tide of U.S. shale-oil, Citigroup Inc. says, and turn out to be a mis-step as “counter-productive” as last year’s price war. Or the price squeeze could accelerate efforts to find other energy sources, as in India, a critical customer.
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