As production cutbacks begin to take effect later this year, analysts are predicting global oil markets will begin to see a sizable supply deficit by the fourth quarter.

The latest predictions indicate that the global market for oil may be short about 2 million barrels per day by the fourth quarter, which will more than counter the expected 300,000 barrels per day surplus predicted for the second quarter, according to a Bloomberg report citing OPEC data.

The shortage is being predicted due to the recent announcements of production cuts by both OPEC and non-member Russia, which had announced its own voluntary production cuts in retaliation for Western sanctions imposed on it over the war in Ukraine.

On April 2nd, OPEC announced it would be lowering its planned production output by 1 million barrels per day through the end of the year, saying it needed to stabilize the market against any potential price shocks, following drops in the price of oil in the wake of the banking crisis in March, traders feared threatened to lower the demand outlook.

Soon after the OPEC announcement, Russia announced it would be extending its own production cutback of 500,000 barrels per day through the end of the year.

Analysts note that actual reductions in oil output are often not as severe as the announced cuts to production quotas, since some nations will already be producing below their assigned quota and thus will not reduce current production levels. However a recent analysis by Bloomberg found that Russia’s promised production cut of 500,000 barrels per day was in reality 40% higher when examined through Russian energy ministry data, coming in at roughly 700,000 barrels per day.

Regardless, the data indicates that as the year continues, the market will see a tighter oil supply, as demand continues to ramp up, particularly from a rapidly growing Chinese economy emerging from the doldrums of the Covid-19 pandemic. That will undeniably act as an upward pressure on crude prices, which already have increased 20% over the last month

In addition, OPEC predicts there will be a 2.3 million barrel per day increase in oil consumption this year, leading to a new record of 101.89 million barrels per day in demand.