Is the Oil Output Deal Working Too Well?

When OPEC and Russia meet this weekend to review their strategy for clearing a global oil glut, they’ll face an unusual problem: it could be working just a bit too well.As their output cuts, coupled with robust global demand, tighten the market, crude prices have soared to a three-year high near $70 a barrel. That’s prompted warnings — from Iran’s oil minister to Goldman Sachs Group Inc. — of a fresh surge in U.S. production, wrecking all of OPEC’s hard work.

“The big concern is prices — are they worried about prices going too high too quickly?” said Mike Wittner, head of oil-market research at Societe Generale SA in New York. “There are many reasons they’d be concerned, but top of the list is: how will U.S. production respond?”

Source: OPEC-Russia Oil Deal Faces a New Danger: Too Much Winning – Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.