What’s going on here?

Believing the oil price needs sharpened up, Saudi Arabia announced another supply trim over the weekend.

What does this mean?

Call them crazy, but folks and firms tend to spend carefully when imposing interest rates and inflation send economies hurtling toward recessions. And because that prudent behavior whittles down demand for industry-fueling oil, the price of the stuff has been on a slump this year. So even though OPEC – a group of oil-producing nations that pump around 40% of the world’s slippery elixir – cut supply just two months ago, mounting concerns over China’s future kept prices squashed last month. Now, though, OPEC’s de facto leader Saudi Arabia has announced another cut of one million barrels a day from July, saying it’ll do “whatever is necessary” to stabilize the market. So far, so good: oil prices initially jumped after the reveal.

Why should I care?

Zooming in: Beware of the world’s biggest oil exporter.

Saudi was the only country in the group to announce more cuts, with others merely pledging to maintain their current cuts until 2024. But the big dog has reason to bark loudest: the IMF estimates Saudi needs the oil price above $80 a barrel to balance its government budget and fund projects touted to transform its economy. And since Saudi has a rare track record of actually delivering on promised cuts, you can bet the bite will probably match the bark.

The bigger picture: Public transport ain’t all bad.

This cut will take Saudi’s production to its lowest in years, but the country will still have plenty of room to trim if needs be. So given that vow of “whatever is necessary”, Goldman Sachs reckons its forecast of $95 a barrel by the end of the year is looking more likely. In reality, that’ll depend on how demand shapes up – but if Goldman’s theory comes good, gas fumes won’t be the only reason eyes water at the pumps.

What’s going on here?

Forecasts have predicted that the airline industry’s bagged itself a mighty meal ticket.

What does this mean?

The airline industry’s had more than its fair share of challenges over the last few years, and it looks like perseverance and patience are finally starting to pay off. Carriers have been grinning from wing to wing when announcing forecasts lately, cheered up by plenty of short-haul summer vacation bookings and the start of a resurgence in the more profitable long-haul routes. Mix in cheaper prices for jet fuel, and it’s no wonder the International Air Transport Association now expects the industry’s profit to hit nearly $10 billion this year, double the forecast made in December and a well-deserved lift-off from last year’s $3.6 billion loss.

Why should I care?

Zooming in: Forget about your cheap euro summer.

US and European airlines might be flying around the same number of flights this year compared to pre-pandemic 2019 – but if you’re jetting off soon, you’ll cough up a lot more. You can’t expect a seamless service in return, either: despite hopes of avoiding a rerun of last year’s summer chaos, there are still warnings that strikes could cause disruptions. And trips will likely get more and more expensive from here on out: your next flight ticket may well include the cost of climate-friendly initiatives and stricter regulation that’s been passed onto customers.

The bigger picture: Not yet cleared for takeoff.

That’s not to say the industry’s in the clear, though. While the sector’s never been known to boast especially strong profit margins, current numbers are looking pitiful for an industry that generates over $800 billion in sales each year. And there are plenty of problems on the ground too: manufacturers and repair shops are hampered with delays and backlogs right now, and if that keeps up, airlines could be facing some serious headwinds going forward.