Commodity Weekly: A Fracturing OPEC Sends Prices Lower
Truth be told, what the market is reacting to are the fundamentals, which continue to show that global oil supply remains above the historical 5-year average – the stated aim of the OPEC/non-OPEC production pullback.
A further fractured OPEC – one that has already seen its influence over global oil markets significantly reduced over the past few years – will likely work to increase global supply.
Members would be more inclined to break quota and strike out on their own to gain or maintain market share. At the same time, crude off-takers will look to diversify supply away from OPEC due to its unreliability, potentially to the benefit of other large producers, such as Russia and the United States.
Delia Morris has worked in the international upstream oil & gas industry for over 13 years. Please contact Delia at delia.morris@gmail.com.
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