Letter on OPEC: OPEC’s ‘elastic’ supply problem

A high-price market management strategy will continue to prove difficult until demand makes a strong recovery

The world finally showed signs of recovery from the Covid-19 crisis in 2023. People started driving and flying to faraway business and holiday destinations. The expected ‘hard landing’ of the global economy has, most likely, been avoided. Stock valuations are higher than ever, and the US Federal Reserve may start cutting rates as early as March. For the first time, demand for oil exceeded the pre-pandemic record of 101m b/d in 2019. The IEA estimated that the world consumed 0.1m b/d more last year, with expectation of further growth of 1.4m b/d this year and another 1.3m b/d in 2025. So, with all the good news out there, why is OPEC still struggling to support oil prices? The first reason is