Here's one big reason oil prices are near a seven-year high: OPEC and Russia are producing less than they promised.
The Organization of the Petroleum Exporting Countries and 10 other major crude oil producers, including Russia, have been gradually increasing their output after taking 9.7 million barrels per day out of the market as demand collapsed in the early days of the coronavirus pandemic.But the group, known as
will not be able to produce what they say in the future," said Bjørnar Tonhaugen, the head of oil markets at Rystad Energy."There is anxiety about damage to production capacity from Saudi Arabia to Kuwait and Russia, from too low investments during the pandemic and before." Missed targetsProduction from
countries are pumping at full capacity, and bringing forward production increases could upset the balance of power within the group. Who could pump more?Saudi Arabia and the United Arab Emirates are the countries that rely on oil revenue to fund government spending have benefited from the recent price surge. Russia, which has amassed roughly 100,000 troops on Ukraine's borders but denies that it is planning to invade its neighbor, has its own reasons to want higher prices.
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