reply Rising oil prices are hurting the recovery of the world economy

The shale oil and gas revolution in the United States promoted the substantial growth of oil and gas production in the United States and the gradual entry of global oil and gas supply into relative surplus, which enabled the United States to gain a great say in the market. Since 2014, international crude oil has entered a period of low price.In response, OPEC and a group of countries led by Russia formed a coalition of producers known as OPEC + in 2016 and decided to cut production to keep crude prices in an acceptable range. However, the COVID-19 outbreak in early 2020 caused an unprecedented impact on global oil demand, and OPEC + threatened to collapse due to the price war between Saudi Arabia and Russia. Under pressure from the US, OPEC + finally managed to maintain market stability and its own credibility by cutting production by 9.7 million b/d starting in May.With the advance of economic restart and the recovery of demand, the international oil price maintained a narrow range fluctuation in the summer and autumn of 2020, and the OPEC + production cut agreement achieved obvious results.But to the surprise of many, U.S. shale oil and gas companies haven't ramped up spending and production as quickly as they had hoped after oil prices rose above their cost. The fact that U.S. oil and gas companies are under pressure from investors and the market to repair their balance sheets and not significantly increase their spending to increase production means that U.S. oil and gas companies will not be able to respond to oil price signals for a while, and they will not be able to act as mobile producers to effectively counterbalance rising oil prices.With OPEC + controlling more than half of the world's remaining production capacity, Saudi Arabia's control over the crude market is critical, said James Burkhard, vice president of oil markets, energy and transportation at EIA. Given that oil demand will recover, it will be difficult for Saudi Arabia to meet it unless it increases production, increasing its influence on prices.In addition, OPEC + has strengthened the enforcement of the production cut agreement and met frequently to coordinate production policies, operating more and more like a "central bank" in the global oil market.Saudi Arabia and other OPEC producers, who feel they have regained a high degree of control over oil prices, have been interested in reining in supply to push prices up further. It is no surprise, then, that Saudi Arabia announced a further 1 million b/d of voluntary production cuts in April, and OPEC + decided to keep production steady overall in April.For now, analysts say, neither Saudi Arabia nor Russia wants to allow production outside OPEC + to grow too fast.From the point of view of an oil producer, the difference in oil revenues between a higher oil price with production under control and a lower oil price with increased production seems small. However, for countries dependent on crude oil imports, the artificially tight supply of higher oil prices at a time when global oil demand is significantly below pre-epidemic levels puts their economic recovery at risk of inflation.Progress in vaccination is now fuelling expectations of economic recovery and, while financial systems are flush with liquidity and government stimulus measures have led to significant increases in consumer savings rates in some countries, higher oil prices could increasingly be a headwind to the recovery process.