As far as jobs go, Opec’s has become one of the toughest around. It is one thing to try to stabilise a growing oil market, alternatively tightening and loosening the taps in order to smooth out cycles. It is quite another to attempt to hold prices artificially high, amid slowing demand growth and new pools of supply. Indeed, there are signs that the cartel and its outside supporters — the so-called Opec+ — may be running out of road.
That is one way to read this weekend’s announcement. While all the existing curtailments have been extended, the “voluntary cut” by eight members of 2.2mn barrels a day (mb/d) will gradually be reversed from October 2024, subject to market conditions.
It is not hard to see why Opec+ members — which have amassed 6.5m b/d of spare production capacity according to Goldman Sachs — might want to bring some of that back online. Yet the market will struggle to accommodate these extra barrels without prices falling. Already, non-Opec supply is rising more than demand, thanks in large part to the growth in US shale. It is forecast to do so next year as well.