Middle East oil production plunge

What happened: Middle East oil production has plummeted due to recent conflicts. Goldman Sachs reports a 57% drop from pre-war levels, with production falling to 6.5 million barrels per day (mbpd) in April, down from 14.5 mbpd in 2019. Iraq's production collapsed by 61% in March, according to OPEC data. The International Energy Agency (IEA) confirms global oil demand growth has been wiped out due to this 'Gulf energy shock'.

Market impact: This sharp decline in supply is driving up oil prices, with Brent crude surpassing $70 per barrel. Energy companies like ExxonMobil and Shell are benefiting from higher prices, while consumers face increased fuel costs. The global economic recovery may slow due to higher input costs for industries reliant on oil.

What to watch next: On May 1, OPEC+ countries will decide on production increases, which could ease supply constraints. On May 12, the IEA will release its monthly oil market report, providing an updated outlook on demand and supply dynamics. Additionally, geopolitical developments in the Middle East will influence the narrative, with any escalation or de-escalation of conflicts potentially impacting production levels.