The oil market is rapidly shifting from a period of over-supply during the height of the pandemic to one of potential shortage. Producers who managed the slump now need to be diligent in managing the recovery.
The oil producing countries in the OPEC+ group — led by Saudi Arabia and Russia — have done an amazing job at managing oil supplies as demand has crawled its way back from the biggest collapse in history.
Sure, they got off to a shaky start. Instead of slashing supply as demand cratered in April 2020, they boosted it in a production free-for-all after their previous cooperation fell apart. The deal that emerged when they eventually got together took days to form and almost foundered on the unwillingness of Mexico to play its part.
But after some vague pledge from President Donald Trump that the U.S. would make up the cuts that Mexico refused, the producer group announced a record output reduction of almost 10 million barrels a day. And, for the most part, it has stuck by what it promised.
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