Oil prices face big volatility affecting the Mexican market significantly

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After more than a year of pressure from the United States and other top oil-consuming countries, OPEC+ finally agreed to accelerate oil supply increases last week to tame runaway fuel prices and slow inflation.

But that will leave producers with very little spare capacity, and almost no room to compensate for a major supply outage.

Tight spare capacity is likely to keep oil prices volatile and sensitive to any disruptions in output, such as a big hit from a hurricane to Gulf of Mexico production during the Atlantic storm season, or a further fall in exports from sanctions-hit Russia.

Reuters Graphics
Reuters Graphics

The most conservative estimates forecast OPEC’s spare capacity dropping to below 1 million barrels per day (bpd) later this year, representing about 1% of global demand and barely one-twentieth of U.S. demand.

Only a handful of OPEC producers, namely Saudi Arabia and the United Arab Emirates, have any meaningful spare capacity.

Source: OEM

Mexico Daily Post