No Easy Way Out

May 20, 2022

OPEC is facing challenges balancing the market

Oil supply and prices have been front and center since the Russian invasion of Ukraine, even though Brent prices were already approaching $100/barrel, their highest level since the summer of 2014, prior to hostilities breaking out. The oil markets were already tightening as rapidly recovering oil demand was facing a slow return of production.

This, in combination with ever-tightening sanctions against Russia, which is a major crude oil producer and exporter, has made it into a full-blown crisis. In the Western world, there is widespread support for the tough sanctions on Russia, but it has contributed to further oil price increases. Faced with record-high gasoline prices, the U.S. government is trying to bring more supply to the market.

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