These moves in the commodity come as the U.S. encouraged OPEC and its allies to increase their output in order to lower prices and fuel an economic recovery. On top of this, the International Energy Agency also lowered its forecast for demand in oil for the rest of the year as Covid cases spike again. In the meantime, Iran reported its lowest output in 40 years in 2020. At less than 2 million BPD, the EIA said, the country’s oil output was affected by both the pandemic, which decimated demand for oil and U.S. sanctions targeting specifically the Iranian oil industry.
While the Biden Administration calls on OPEC+ to boost production more than planned, the major oil forecasters scaled back their outlook on how much OPEC+ crude the market would need. “The immediate boost from OPEC+ is colliding with slower demand growth and higher output from outside the alliance, stamping out lingering suggestions of a near-term supply crunch or super cycle,” the IEA said in its closely-watched Oil Market Report published on Thursday. The market balance is hard to maintain as the world changes by the minute, but oil should be heading back up in the near future as supply and demand evens out.
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