China Xiaokang Network, May 22nd, it took Lao Ma 500 days and made the sacrifice of reducing production by nearly 1 billion barrels before the global crude oil market eliminated the huge oversupply, but oil prices have now reached the level of the Organization of the Petroleum Exporting Countries (OPEC ), the $80/barrel level favored by heavyweight member Saudi Arabia.
Global crude oil production changes chart
Reuters reported that Brent crude oil futures reached $80.18 per barrel on Thursday, breaking through the $80 mark for the first time since November 2014.
The massive excess crude oil inventory has disappeared, investors are more enthusiastic about rising oil prices than at any time in the past four years, and market observers are beginning to talk about the possibility of oil prices returning to or even rising above $100 per barrel.
The United States' resumption of sanctions against Iran may severely hit the country's crude oil exports, and Venezuela, Mexico and other major oil-producing countries such as Angola are forced to reduce production. These factors have contributed to the rebound in oil prices.
Saudi Arabia, led by OPEC, and 10 other countries including Russia, have joined forces to reduce production by 1.8 million barrels per day since January 2017.
Since hitting a 13-year low of $27 a barrel in January 2016, oil prices have risen by $50 and have surged 50% in the past 12 months, reflecting market concerns about geopolitics and confidence in an improving balance between supply and demand.
The premium of Brent crude oil futures over the far-month contract is at its highest level in several years, indicating that investors and traders believe that supply will exceed demand in the coming period.
But OPEC and its allies may end up becoming victims of their own production reduction plans. The International Energy Agency (IEA) warned that given the sharp rise in oil prices, a slowdown in global demand growth is almost inevitable.
At the same time, the rise in the US dollar since the beginning of the year may have suppressed the purchasing power of major crude oil importing countries. In particular, many countries such as India and Indonesia have stopped generously providing fuel subsidies and other benefits to car owners.
