I learned over years that the markets aren’t really rational.
You need to count actual effect of the production cuts to determine what is better for your industries to displace your competitors and sell more at low price or to make cuts and sell less at premium altogether with the rest.
It doesn’t mean the markets would precisely follow your expectations.
They tend to overreact.
One thing for sure no matter how good it is to have a cheap gas oil shouldn’t cost $20. It simply drags the rest of the markets with it.
And if Trump wants foreign producers to cut production to bring price up it shouldn’t be used for unfair advantage of US producers. I am not saying their interests should be ignored but then they shouldn’t brazenly use the cuts Trump is asking for to replace foreign offer.
All in all even with dwindling demand in the absence of these feuds the price wouldn’t be that low.
I agree, actually, but the problem for SA and Russia is that the US sets the price “roof” now. Say oil gets back to $45 or $50 a barrel, and SA and Russia are pumping 20% less when it all works out. Sure, I’ve argued here before that they can endure that for a while due to low production costs, but, they need higher profits than that in the long run, especially when demand is down.
A lot of this depends on how quickly COVID-19 is subdued, and how much the world economy rebounds, but the prospects for the world economy look rather bleak for some time, I think.