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Our crude Nash point

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A cartel of oil suppliers focused on market control has hinted of an output squeeze in response. This could return this global game to its Nash equilibrium, in a way, where neither side gains much from switching tack

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How much extra crude oil must be released for global prices to cool down? All big consumers of this fossil fuel source have an interest in cheaper supplies. Under inflationary pressure, the US has led a coordinated release of reserves held for exactly this purpose. Washington decided to let 50 million barrels out of storage, while India promised to pitch in with about a tenth of that. Japan, South Korea and the UK are also expected to join forces, though oil-guzzler China still seems to be weighing its options. The signalling effect of these decisions has been weak so far. Oil prices dipped a bit but still hover around the $80 mark per barrel. Will actual outflows from caverns and tankers push it down?

Don’t count on it. At about 99 million barrels currently, the world’s daily oil consumption is projected to go back above 100 million by year-end. While small volume shifts can cause sharp price movements, the announced releases may be too tiny for a big impact. Moreover, a cartel of oil suppliers focused on market control has hinted of an output squeeze in response. This could return this global game to its Nash equilibrium, in a way, where neither side gains much from switching tack.

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