OPEC+ Won’t Pivot on Production Until Oil Prices Fall Further
Watch what OPEC+ does, not what the oil cartel says.
Photographer: David McNew/Getty Images
With apologies to Rene Descartes, to know what OPEC+ really thinks, pay attention to what it does rather than what it says. Despite warnings that it may pause — or even reverse — its campaign of production hikes, the cartel has pushed ahead with output increases in the face of a weakening oil market.
Current prices, in the mid-$60s a barrel, aren’t low enough to prompt OPEC+ to pivot. My gut feeling is that to meet the cartel’s pain threshold, Brent crude, the global benchmark, would have to drop into the low $50s — equivalent to the US oil yardstick West Texas Intermediate dropping into the high $40s — for an extended period before Saudi Arabia takes the first steps to changing its stance.