Oil supply shocks: what happened next
After 5 supply cuts and disruptions since 2016, Brent moved +6.49% on average by the first close and +4.52% over 20 sessions, higher after 20 sessions in 60% of cases. The first reaction has often faded as other producers, demand and inventories adjusted.
When producers cut output or a major facility goes offline, the supply loss is visible immediately, but the price effect depends on spare capacity, inventories and demand. This study measures dated OPEC+ decisions and disruptions. Weekend events are measured from the last close before them.
Average reactions to supply cuts
| Market | Cases | Day 1 | Day 5 | Day 20 | Up after 20 days |
|---|---|---|---|---|---|
| Brent crude oil | 5 | +6.49% | +4.09% | +4.52% | 60% |
| WTI crude oil | 5 | +6.03% | +1.49% | +5.49% | 60% |
| Heating oil (ULSD) | 5 | +4.88% | +5.49% | +0.86% | 60% |
| Natural gas (Henry Hub) | 5 | -0.17% | +0.45% | -0.68% | 60% |
| Exxon Mobil | 5 | +2.44% | +1.74% | +5.84% | 80% |
| Shell | 5 | +1.54% | -0.01% | +1.64% | 80% |
| TotalEnergies | 5 | +1.79% | +1.27% | +3.99% | 80% |
| S&P 500 | 5 | -0.28% | -0.49% | +1.80% | 80% |
| Gold | 5 | +0.18% | -0.82% | -1.93% | 20% |
| US dollar index (DXY) | 5 | +0.26% | +0.60% | +0.70% | 80% |
| USD/TRY | 5 | +0.41% | +1.68% | +2.81% | 100% |
Every event
| Date | Event | Brent, day 1 | Brent, day 20 | Exxon, day 5 | S&P 500, day 5 |
|---|---|---|---|---|---|
| November 27, 2014 | OPEC decides not to cut output despite falling prices | -9.77% | -23.54% | -0.12% | -0.04% |
| November 30, 2016 | OPEC agrees its first output cut since 2008 | +8.82% | +21.22% | +1.93% | +0.34% |
| September 14, 2019 | Drone attack shuts the Abqaiq processing plant in Saudi Arabia | +14.61% | +0.48% | -0.77% | -0.51% |
| April 12, 2020 | OPEC+ agrees a record production cut | +0.83% | -1.62% | +0.21% | +3.04% |
| October 5, 2022 | OPEC+ cuts its output target by 2 million barrels a day | +1.71% | +3.10% | +2.87% | -5.33% |
| April 2, 2023 | Surprise voluntary cuts announced by Saudi Arabia and other OPEC+ members | +6.47% | -0.58% | +4.45% | 0.00% |
Related insights
Brent at $102.31: a Hormuz risk premium meets a seasonally weak window
OPEC+ held output steady and the Brent-WTI spread widened above $11. Autumn refinery maintenance usually softens crude demand.
Natural gas enters one of its strongest seasonal months with LNG flows disrupted
October has been one of Henry Hub's strongest months in our data. Storage builds are running below average and Qatar extended force majeure into winter.
Gold holds its ground despite yields at multi-decade highs
Real yields would normally weigh on gold. Central-bank buying is one reason the pullback has stayed contained.
Sugar surges, cocoa enters its weakest month, coffee jumps on Brazil rain
Three soft commodities with very different October records and very different supply stories.
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