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The Covid-19 pandemic has ravaged energy markets and decimated demand. Of the three fossil fuels, coal, natural gas, and oil, demand for the latter was affected most due to its importance for the transportation sector. With grounded airplanes, reduced shipping, and parked cars across the world, the consumption of petroleum products decreased significantly in 2020. As demand recovers and oil prices rise at the beginning of this year, markets are increasingly concerned that the OPEC+ agreement that has provided moderate stability, could be about to fall apart. Last year, two of the three largest oil producers in the world, OPEC’s de-facto leader Saudi Arabia and Russia, agreed on production cuts to stabilize the market and to prop up prices. This led to a record 9.7 million barrels per day (mbpd) being taken off the market. Although it’s a massive number under normal circumstances, the cuts were barely enough to stabilize prices. During the last OPEC+ gathering, negotiations were particularly difficult due to the diverging views of Russia and Saudi Arabia. For Riyadh, Moscow’s continued participation is crucial. Despite the challenges, the involved parties agreed to extend the production cuts. Russian producers were allowed to increase production in February and […]
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