Does the Market Need OPEC/OPEC+?

Does the global oil market need management? Why or why not? What will happen if OPEC/OPEC+ are dissolved?

Dear Subscribers:

All eyes are on the much-anticipated meeting of OPEC/OPEC+ on Sunday, June 4. We will publish a report on what is expected and what is the impact on global oil markets as early as tomorrow (Friday). For now, we are reposting this article: Does the Market Need OPEC/OPEC+?

The oil industry, just like any other extractive industry, is capital intensive with its costs mostly being sunk cost, while the operating cost is relatively small.  During a period of an economic downturn and very low oil prices, producers focus on the operating cost. They continue to produce despite the hefty losses. As history shows us, the result is cut-throat competition and a waste of the world’s scarce resources.