Exceptionally, Saudi Arabia announced a bigger 37% cut (low base level from 12m to 11m + 1mn voluntary cut). US had also voluntary picked up Mexico’s share of 400,000 barrels cut thus safe to assume US production to fall near 10m barrels, temporarily.
Initially, as demand picks up (in a squeezed supplier market) oil prices would (and have recovered). However, increase in demand (and oil prices) prompts the OPEC+ to announce reduction in cuts (increase in supply) that may keep a cap on the oil prices in $40-45 range.
What’s interesting to see is that Russia is a clear winner in the post-covid oil market because of a) cheaper production costs b) less Fiscal damage c) flexible currency & d) no political pressure from the US.
Thus Gulf oil nations are restructuring. Increasing taxes, diversifying & investing outside through sovereign funds. Time to break the USD peg, especially when USD is expected to crash in few year?