Three Great Values in the Essentials. All of a sudden, some OPEC members are openly worrying about a price plunge because of an oil glut. Just a few weeks ago, OPEC was confident that prices would hold, and that members would live up to their production agreements. Now the talk is about an oil glut and falling prices.
Truth is that there is and has been an oil glut.
Then, in the 1990s, OPEC engineered a production cut. But the artificial slowing of production doesn't change the facts. The oil in the ground didn't shrink and demand didn't suddenly shoot up. In fact, it is difficult for oil producers to curtail production. Once you have a well pumping, the best strategy usually is to pump at the fastest rate possible for the long-term health of the well.