Source: Fortune
Summary
OPEC+ agreed to increase oil production by 206,000 barrels per day in April, a slightly accelerated pace, despite a conflict in the Middle East that threatens to disrupt global oil flows. The hike is 1.5 times bigger than the previous increase, but some analysts believe it may not calm markets due to concerns over export constraints in the Strait of Hormuz. Oil prices have climbed to a seven-month high of $73 a barrel in London.
Our Reading
The numbers tell one story.
OPEC+ is resuming oil production increases, but the conflict in the Middle East may limit the impact. Saudi Arabia and Russia are leading the effort, but spare production capacity is largely confined to Saudi Arabia and the UAE. The actual increase in barrels may be “exceedingly modest” due to producers being “maxed out”.
The strategy enters a familiar phase, where OPEC+ tries to reclaim market share and heed calls to lower fuel costs for American consumers.
The Organization of the Petroleum Exporting Countries’ spare production capacity is largely an illusion.
Author: Evan Null
