OPEC Losing Control as US Supply Booms, Threatening Oil Prices

Longest decline in oil prices in years as OPEC struggles to regain control

OPEC and Saudi Arabia are facing challenges in maintaining control over the world oil market as booming US supply offsets OPEC’s supply cuts. The decline in oil prices over the past seven weeks, the longest in five years, indicates wavering control. Brent crude, the international benchmark, rose 2% on Friday to $75 a barrel, down 18% from mid-October levels. West Texas Intermediate crude also rose 2% to $70 a barrel, down 19% from mid-October levels.

The decline is a setback for OPEC and Saudi Arabia, which have been trying to stabilize oil prices for the past year through production cuts. Both Saudi Arabia and Russia have already enacted cuts, with the potential for further reductions if necessary. However, the market appears unmoved by these threats, attributing the fall in oil prices to increased US production and expectations of softer demand in the future.

Energy expert Paul Sankey suggests that if these pressures continue, Saudi Arabia may resort to waging an “oil market share war” against the US by flooding the market with oil to regain control of prices.