When the price of oil rises SUDDENLY, usually caused by some world event, there is a rush to produce and sell at the higher world market price. This mitigates the shortage in a short period of time and invariable produces a glut. As the price rises, greed drives some members of OPEC to sell over their agreed upon allotment creating a "black market" supply. Sometimes Saudi Arabia tries to counter this by cutting back on it's on production, despite the higher world price. Other oil producers rush available supplies to market. In the U. S. oil patch, dormant wells are revived as the higher price makes it practical to borrow money to repair and update pumping and storage equipment. Small producers in the oil patch generally fix up their equipment when the price goes up and run the equipment until it fails or needs a general overhaul. If the market price is still high, they go ahead and spend the money to make repairs. If not, they shut down the well and wait for the next price spike. The bankers they do business with understand this cycle.
