The Historic Oil Price Truce Won’t Last
The great battle for market share between the Americans, the Saudis and the Russians will probably restart once demand for crude oil returns.
A slump at the pump.
Source: Bloomberg
After four days of high drama, low farce and long periods of tedium, the OPEC+ group of countries, led by Saudi Arabia and Russia, finally agreed to a record cut in their oil production in response to the coronavirus-triggered collapse in demand. But the deal will come under pressure when the world becomes a more normal place again.
The drama was provided by Mexico refusing to accept its allotted cut. The farce followed when the country’s oil minister left the virtual OPEC+ meeting to hold separate talks with her U.S. and Canadian counterparts, while the other energy ministers agonized for hours, and then for days, over how to respond. The tedium? Well, that was just the bits in between.