OPEC Is Losing Its Mojo on Wall Street

livemint.com:

Throttling back on oil production hasn’t helped OPEC and its allies to push up crude prices lately. At least four times in the past 15 months, members of the alliance known as OPEC+ have slashed oil output, only for prices to soon retreat anyway. A surge near $100 a barrel petered out earlier this year, and crude futures tumbled 10% in the two weeks after the coalition announced a roughly 5% reduction on Nov.

30. Even after shipping disruptions in the Red Sea spurred a recent rebound, Brent crude, the global pricing gauge, traded Friday at around $79 a barrel. That is down from about $85 a barrel when OPEC+ started this round of cuts in October 2022—despite those now amounting to nearly 13% of the group’s 2022 production.

The Saudi-led Organization of the Petroleum Exporting Countries and its Russia-led allies joined forces seven years ago this month, consolidating control over more than half the world’s oil supplies after soaring U.S. shale production sparked a collapse in prices. Now, output is surging again from the U.S.

and other countries. Cartel members are widely suspected of dodging their quotas. And investors are questioning the coalition’s cohesion, especially after Angola announced this week it was leaving.

“I just don’t know how that group is able to generate sustained upward price pressure anymore," said Alex Turnbull, portfolio manager of Singapore-based Sagax Capital. Pushing OPEC+ to this point: a flood of fresh petroleum gushing from the West Texas desert and undersea wells off South America’s coast. Global oil demand has grown by a robust 1.9 million barrels a day this year, according to S&P Global Commodity Insights.