Over the course of this month, oil prices stabilized at a rather convenient $40-$45 a barrel compared to five months ago, when they were below $16 and created complex conditions for oil-producing countries. Prices are expected to recover by the end of this year, suppport resumption of commercial activities that were severely affected by COVID-19 and the subsequent shut down of economies.
The reasons behind the upward trend in prices are many, but in particular the OPEC+ agreement to decrease production by a staggering 10 million barrels per day was instrumental. The agreement saw a commitment to cut production quotas by 90 per cent, something which has historically been limited in such cases. Even those who exceeded their quotas at the starting of the agreement, such as Iraq and Nigeria, quickly got back to full commitment owning to pressure by major countries from inside and outside OPEC, such as Saudi Arabia and Russia.
Other reason could be easing of lockdown measures, especially by the biggest oil consumers, such as China, the US, EU and Japan, after they put in place measures to slow the spread of the pandemic. This consequently led to an increase in demand and created the conditions for higher prices.