The world’s oil glut is much worse than it looks — and Saudi Arabia can’t fix it on its own

A meeting of ministers from OPEC states and their oil-producing allies will take place in Abu Dhabi this week. It will probably be a subdued affair. Oil prices remain stubbornly low despite big output cuts by the so-called OPEC+ group and geopolitical factors such as the U.S. sanctions on Iran.

The original target of the output cuts back in November 2016 was to get stockpiles back to their five-year average level. That was never going to be enough, though. The problem is that this average has been inflated by the very excess stockpile that OPEC+ is trying to drain. That leaves the producers with a lot more excess crude to drain. OPEC assessed that commercial oil stockpiles in the industrialized countries of the OECD totalled 2.955 billion barrels at the end of June. That’s 258 million barrels more than the 2010-2014 average for the same month.

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