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The Organisation of the Petroleum Exporting Countries (OPEC) may no longer hold the market-shaping power it once did over global oil prices, according to Patrick De Haan, Head of Petroleum Analysis at GasBuddy.
During an appearance on CNBC’s Fast Money at the weekend, De Haan discussed the challenges facing the oil cartel, particularly in its ongoing struggle to sustain higher prices in an increasingly competitive market.
“OPEC’s relevance likely has been reduced. They are continuously fighting lower prices,” De Haan remarked, emphasizing the cartel’s diminishing influence in the face of evolving global energy dynamics. He pointed to the stagnation in West Texas Intermediate (WTI) crude oil prices, which have hovered around $70 per barrel without showing signs of surpassing that threshold. “WTI today is about $70 per barrel and really struggling to get anything above that level,” he observed, highlighting the difficulty OPEC faces in pushing prices higher.
De Haan also noted the uncertainty surrounding OPEC’s production strategies, especially with the potential increase in output planned for April 2025. However, he suggested that this timeline might be delayed further, adding, “It will not surprise someone if they continue to push that to July or potentially till the end of 2025.” This unpredictability, De Haan noted, reflects the challenges the oil cartel faces as global energy markets remain volatile and subject to rapid shifts.
Looking ahead, De Haan forecasted that the struggles in the oil industry would have uneven impacts across different sectors. “I think next year will be more of a struggle for the upstream than it will be for the downstream,” he said, predicting that exploration and production activities may face greater difficulties compared to refining and distribution.
The erosion of OPEC’s dominance in the global oil market is tied to several shifting factors. The rise of alternative energy sources, increasing investments in renewables, and the emergence of non-OPEC producers—particularly the United States with its booming shale oil production—have significantly curtailed OPEC’s ability to control prices. De Haan’s comments align with a growing consensus among analysts that the cartel’s traditional strategies are becoming less effective in today’s rapidly evolving market.
Once able to make immediate ripples across the globe with coordinated production cuts or increases, OPEC’s decisions are now often met with muted responses, as market participants account for a broader range of supply sources and technological innovations.
Earlier this week, Vandana Hari, a global energy market expert and founder of Vanda Insights, echoed similar concerns. She remarked, “I think that is where the market attention is focused because that’s the variable. With OPEC+, we’ve seen three postponements of the unwinding of the 2.2 million barrels per day. What that tells me is that OPEC+ despite all the talks in the market speculation is managing to remain cohesive.” Hari continued, “I think that is the most they can do or the least they can do in their view. They really don’t have the bandwidth to prop prices much higher.”
As global energy markets continue to evolve, it is clear that OPEC’s ability to influence oil prices is no longer as robust as it once was, and its future strategies will need to adapt to the changing landscape.
