Is This the End of OPEC, or the Beginning?

Today’s the day. 

Earlier this week, we talked about the “moment of truth” for oil. The ongoing war of words between OPEC and the IEA that has been boiling all year is about to come to a head as the Saudi-led oil cartel finally meets in Vienna.  

And there’s only one question on everyone’s mind: To cut or to not cut. 

Let’s put a little perspective on this, shall we? 

If we add up all the oil that OPEC and its allies (i.e. Russia) supply, we’re talking about a significant number of barrels — around 40 million, or roughly 40% of the world’s daily output. 

That’s a hefty chunk of supply, no matter how you slice it.

The fateful decision at hand, however, is whether or not deeper cuts need to be made. As it stands now, OPEC+ has already slashed output by around 5 million barrels per day, which doesn’t even include the voluntary cuts made by Saudi Arabia and Russia. 

By the way, those voluntary cuts are going to be extended well into 2024. Maybe even longer depending on how things shake out. 

But there’s an interesting twist that makes this particular meeting so important. Aside from its very public fight with the IEA recently, there’s a bit of an internal discord among OPEC members. 

It turns out that some members want to pump more, namely Angola and Nigeria. Nevermind that we’re talking about a tiny portion of the group’s output. Each one of them only pumps out a little over a million barrels per day at the moment. 

This little squabble over production quotas is what caused OPEC+ to delay the meeting by a week.  

Now here’s the kicker…

If there is one thing that will unify OPEC, it’s low oil prices. 

Judgment Day

If the market was selling off oil after the announcement that the OPEC+ meeting was delayed, it came bouncing right back this week.

As I write this now, a barrel of Brent crude is back over $83, and WTI is looking to surpass $78 per barrel. 

In other words, a deeper cut may still be on the table. And if the Saudis have their way (spoiler: they usually do), it could mean another cut of around a million barrels per day; that would be extremely bullish on prices to end the year. 

We won’t see triple-digit crude prices this winter — not yet, at least — but that decision would certainly be enough to keep a floor around $80 per barrel. 

I want you to push aside the public spat being played out in the headlines for just a moment. I know it’s not easy. 

There’s one underlying catalyst that has been largely ignored by everyone. It seems that throughout all this melodrama, people have forgotten that the world is consuming a record amount of oil — 103 million barrels per day this summer and climbing! 

If OPEC+ can get its act together, the rest of the world is going to be paying a lot more for its crude addiction. 

The problem is that today, there are few producers around the world outside of OPEC that can still increase oil production.

And if we’re assuming the United States’ domestic oil production is already at record levels, the upside for growth is rather limited without something momentous taking place. 

Fortunately for us, that’s precisely what’s happening. 

Tomorrow morning, I’m going to show you exactly how one tiny Texas driller is about to change the shale game from here on out. 

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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