Global Commodities: Oil vigilantes in action

Mar 21, 2025

Oil prices have been stuck below their fair value since last September, largely due to the actions of 'oil vigilantes'—a term that describes how OPEC may step in to stabilize the market. Despite Brent prices nearing historic lows, OPEC is set to increase production. The podcast dives into the complexities of oil dynamics amid geopolitical uncertainty and sanctions affecting key exporters. It also examines the delicate balance of global demand, as growth in Europe and China offsets concerns from downgrades in US GDP.

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Understanding Oil Vigilantes and Market Dynamics

00:00 • 2min

Navigating Oil Dynamics Amid Geopolitical Uncertainty

01:48 • 10min

Speaker:

Natasha Kaneva, Head of Global Commodities Research

Oil prices have been trading below their fair value since last September, a trend we attribute to the actions of Oil Vigilantes—a concept suggesting that when challenges arise and oil prices plummet, the OPEC alliance will step in to stabilize the market and bolster prices. Yet, despite Brent prices trading near their lowest levels since December 2021, the OPEC alliance has chosen to proceed with its plan to gradually increase production starting in April. For the alliance to alter its course, significant market imbalances, such as a sudden drop in demand or a substantial increase in supply leading to swelling inventories, would likely be necessary. So far, none of these conditions have materialized—the downgrades in US GDP have been nearly offset by growth upgrades in Europe and China, keeping our demand projections steady. While OECD inventories are 4% above their 2000-2015 levels, they remain 3% below their five-year averages.

This podcast was recorded on 21 March 2025.
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