OPEC+ Will Struggle to Defend Oil Prices Above $75 for Long
The cartel may have to accept lower crude prices.
The oil cartel may have to accept lower crude prices.
Photographer: Ryad KramdiAFP/Getty Images
After abandoning its pursuit of $100-a-barrel oil in June, OPEC+ faces a new challenge. Increasingly, the market is testing its downside tolerance. In short: Can Saudi Arabia, Russia and their peers defend a floor around $75? It can for a few weeks, or maybe two or three months. But protecting that threshold beyond late 2024 and into next year will be increasingly painful — indeed, so difficult that the cartel will need to let crude prices drop further in 2025.
First, a bit of background. At mid-year, OPEC+ members agreed to a complex deal that would effectively put more oil into the market every month from October. Although the agreement contained a typical get-out clause — “this monthly increase can be paused or reversed subject to market conditions” — traders got the message: More oil means lower prices, and the cost of a barrel fell immediately.