OPEC and its allies’ efforts to cut prices by cutting crude oil are not working
The increase in short-term tensions experienced by the USA and Iran in the Middle East creates havoc in the oil supply of this key region and harms the global economy.
However, the current stocks and current supply of other oil producing countries are well prepared to react to any crisis.
It is not known how the geopolitical situation will change over time, but for now, the risk of a major threat to oil supplies does not appear.
At a time when non-OPEC production is increasing strongly and the five-year average of OECD stocks is over 9 million barrels, there is a solid oil market that will respond to geopolitical tensions.
Roles have changed with the increase in non-OPEC production, which has exceeded demand in recent years. Obviously, OPEC and its allies’ efforts to cut prices by cutting production do little.
A faster growth in oil demand is expected this year, hoping that global growth will increase as trade tensions decline. Such an increase in demand may serve OPEC’s project.
Overall, cuts in OPEC production during 2019 were almost entirely offset by the increase in production from non-group countries.