The oil market’s wild pandemic ride is about to take another turn
The oil industry is no stranger to boom-bust cycles, but the pandemic has been its wildest ride to date, and on March 4 it’s due to take another turn when OPEC meets to consider rolling back production cuts.
As the world’s cars and airplanes idled, global oil demand bottomed out in April at levels 16.4% below the previous year, dragging the price into negative territory for the first time. For the whole year, demand fell an unprecedented 8.8% and still has a long road to recovery.
White-knuckling through it all has been OPEC, the 13-member cartel that dictates quotas for most of the world’s biggest oil-producing countries (notably excluding the US). By tightening or loosening the world’s oil tap, OPEC effectively controls the price of the world’s most valuable commodity. The group has met regularly throughout the pandemic for members to butt heads over its central paradox: To sell less at a higher price, or sell more at a lower price.
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