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    GW

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    GW

    Uploaded by

    vkboss1301
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    13 views1 page

    GW

    Uploaded by

    vkboss1301

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    © All Rights Reserved
    Download as TXT, PDF, TXT or read online from Scribd
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    Last spring the outlook was dire for oil exporting states.

    Just as the Covid-19


    crisis was growing, Saudi Arabia and Russia entered a brief but painful price war
    that left no one at the helm of the oil market for a crucial month. As people
    around the world settled into working from home and shunned air travel, the oil
    demand outlook darkened. Inventories climbed and threatened to create a lengthy
    market glut. It was the worst of times for the Organization of the Petroleum
    Exporting Countries (OPEC) and its partners in the OPEC-plus group, which were
    already suffering from years of relatively low oil prices.

    One year later, the scars are healing. Strong adherence to the unprecedented OPEC-
    plus cuts of 9.7 million barrels per day (b/d) agreed on in April 2020 placed a
    floor under prices and gradually helped to bring the market back in balance. OPEC-
    plus has tapered the oil cuts in several increments since July 2020, and is now
    targeting cuts of 6.55 million b/d below the reference production volumes for May.
    The current plan is for OPEC-plus to raise production by 350,000 b/d this month and
    350,000 b/d again in June, and by 441,000 b/d in July. Saudi Arabia plans to unwind
    its unilateral, additional cut of 1 million b/d by the end of July, beginning with
    350,000 b/d in added volumes this month.

    The oil exporting states, anticipating a significant uptick in road and air travel,
    are feeling more confident about the market outlook for the second half of 2021 and
    beyond. Despite the Covid-19 crisis in India—an important source of incremental
    demand—the oil market has been buoyed by rising vaccination rates in wealthy
    countries as well as an easing of lockdowns. The International Energy Agency now
    forecasts that oil demand will rise by 5.4 million b/d this year and estimates that
    crude and oil products inventories in developing countries have fallen to nearly
    the 2015–2019 average. Oil prices reflect optimism about the demand outlook. Brent
    crude prices rose steadily from November 2020 until this spring and have remained
    above $60 per barrel since early February, although they have only briefly broken
    the $70 per barrel threshold. Downside risks remain, including the ever-present
    possibility of more Covid-19 outbreaks in various countries as well as the
    possibility of a nuclear agreement between the United States and Iran that could
    quickly return several hundred thousand barrels per day to the market. But all in
    all, the major producers are cautiously optimistic.

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