Steep supply reductions of that sort would ultimately lead to skyrocketing oil prices.
British Bank Barclays sees the price headed back to average $73 during the second quarter. However, it is worth noting that the oil market is particularly prone to price overshoots both on the upside and the downside. The record high price for Brent crude was $145 a barrel in July 2008, and it subsequently plummeted to less than $30 in January 2016, according to data from statistics website Trading Economics. On Monday, global oil prices extended their gains from their December lows.
In other words, that "average" price target from Barclays will likely be well short of the actual high in futures prices this year if history is any guide.
The other part of the equation for oil are the sanctions the Trump administration imposed on Iran which was meant to curtail the Islamic Republic's oil exports.
However, despite the tough talk, last year the White House issued waivers to some countries to let them continue buying oil from Iran.
Now there is a question about whether those waivers, which were temporary, will get renewed.
A Jump Start for the Oil Sector
"As a group, the energy sector has been horrific for years," says Rick Bensignor, president of financial consulting firm Bensingnor Investment Strategies.
He measures the performance of the group relative to the performance of the S&P 500 index, which tracks large-cap stocks. And that "relative performance" of the SPDR Energy Select Sector stocks has been in a downward trend since it last peaked in 2008. In simple terms, since 2008, energy stocks have underperformed the S&P 500.
But that could soon be over, says Bensignor.
"The sector's performance is starting to show potential downside exhaustion in terms of relative performance," he says. In other words, the selling of energy stocks by investors may be near its end, potentially paving the way for outperformance in coming years.