It’s starting to look like OPEC+ was right again.
Saudi Arabia and its partners provoked a backlash from the White House and beyond earlier this month when they shocked global oil markets with new output reductions. But with Brent crude sinking below $80 a barrel Wednesday — wiping out the price gains since the announcement — the group’s contention that the cuts were needed to prevent an oversupply is gaining justification.
“There is no doubt in my mind that the reasoning behind the early April announcement about cuts in May was appropriate,” said Ed Morse, head of commodities research at Citigroup Inc. “Those who were predicting over $100 oil did not understand how weak markets were looking.”
It’s reminiscent of the previous round of OPEC+ cutbacks in October — a decision that initially drew condemnation but came to appear prescient as the demand weakened and prices fell.
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