OPEC+ decision delays tanker market recovery.
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Like most analysts, we thought that the OPEC+ oil producers group would decide to increase production by up to 500,000 barrels per day and that Saudi Arabia would reduce their voluntary cutbacks, if not eliminate them entirely. That is not what OPEC+ decided. Except for small allowances for Russia (+130,000 b/d) and Kazakhstan (+20,000 b/d), output was held steady. OPEC is concerned about the global recovery from Covid, based on new variants of the virus and the relatively slow vaccine rollout. OPEC+ will convene again in April.
Not surprisingly, oil prices moved up sharply. Brent prices have now recovered to the pre-pandemic levels of January 2020 and will face more upward pressure as long as the oil market is seen as undersupplied. What are the implications for the tanker market?