People don't know what this means for OPEC+ But the actual consequences have been more complicated because. You'd expect that to drive oil prices up. That means the supply-demand imbalance is set to grow even more than expected. After days of talks, the meeting was called off indefinitely - with no deal and no set plans to meet again. Whether it's geopolitics, economics or interpersonal intrigue driving the dispute, the powerful cartel found itself at an impasse. RBC Capital noted there are "seemingly Shakespearean elements to this drama," which suggests a rift between two crown princes who were once extremely close. Instead, the meeting devolved into drama, as the United Arab Emirates wanted to be allowed to produce more oil individually, which Saudi Arabia opposed. That would serve the group's best interests and would have matched what the cartel has been doing recently. Pretty much everybody expected them to gradually increase their combined output, but not so much that it would cause prices to drop. OPEC+ members got together for their monthly meeting last week. Then OPEC+ met and things got interesting "We've seen a bit of a pivot, and now we're actually looking at, well, what is going to happen if there is a supply shortage?" says Louise Dickson, a senior analyst at Rystad Energy. The result is a totally different market from a year ago - one that has been driving prices steadily up.
#WHAT IS TURMOIL PATCH#
(This was a surprise to everyone, as the shale patch is famous for exuberantly producing oil when prices are rising.)
producers have also been pumping less than expected as they focus instead on making money for investors. That's intended to keep prices high, increasing revenues for oil-producing countries. One huge reason for the supply-demand mismatch is that OPEC+ has taken a very gradual approach to putting barrels back on the market. In the U.S., a record number of people hit the road over the July Fourth weekend, according to AAA.īut oil producers are still pumping less oil Now demand is returning as the U.S., China and some other parts of the world reopen for business as the impact from the pandemic wanes.Ĭommutes, vacation flights and road trips are all pushing fuel demand up. So oil producers slashed their production - including a historic cut in output from the group of countries collectively known as OPEC+, which includes major producers Saudi Arabia and Russia. Markets were thrown completely out of whack.
Last year, as the coronavirus pandemic spread around the world, global oil demand dropped remarkably fast. Here's what you need to know about the volatile oil prices: As millions of Americans hit the road again, there's just no certainty around where crude is headed. Now analysts are bracing for everything from a price spike to a price plunge. You've probably noticed one big consequence - average gasoline prices have climbed to seven-year highs.Īs early as last week, the expectations were that oil prices would either stabilize or rise gradually - until an OPEC+ meeting that was supposed to be routine ended in an unexpected impasse, with no agreement on what to do about oil production. Oil prices have been rising steadily for months.
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