Published in MarketWatch
Of course, there are those who argue that OPEC doesn’t have any real power to control the oil market—especially without sizable surplus capacity.
“The only significant ‘force’ was Saudi Arabia volunteering to maintain large excess capacity for geostrategic reasons,” said Omar Al-Ubaydli, a program director at the Bahrain Center for Strategic, International and Energy Studies. But OPEC is slowly “ditching” this strategy.
The oil market is “99% supply and demand, just like every other commodity,” he said.
“Two of the world’s three biggest producers, the U.S. and Russia, aren’t even in OPEC,” said Al-Ubaydli. “Worst cartel ever.”
Instead, oil prices have managed to head higher based on decreasing investment in the industry, as well as temporary factors, such as the recent disruption to Canadian production, he said.
Al-Ubaydli, who’s also an affiliated senior research fellow at the Mercatus Center at George Mason University, predicted that Thursday’s OPEC meeting will “lead to nothing.” It’ll just be “more grandstanding so that oil ministers can tell their constituents that they are trying hard.”
“If oil prices move, it will be mundane demand and supply factors and nothing else,” he said. “OPEC’s role is precisely zero.”
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