OPEC is losing control of the market

XBR/USD

Key zone: 110.00 - 115.00

Buy: 115.00 (on a pullback following a retest of 112.50); target 117.50-120.00; StopLoss 114.30

Sell: 109.50 (on strong negative fundamentals); target 106.50; StopLoss 110.20

U.S. military actions in Venezuela and the ongoing conflict in the Middle East have dealt a serious blow to OPEC’s stability. Trump, who had long unsuccessfully criticized the Alliance’s policies, welcomed the UAE’s exit from the organization, calling it a step toward lower oil prices.

Such statements are, at best, naive.

In the short term, this may be seen as a political win for Trump, but in a broader perspective, weakening centralized market control creates risks both for the U.S. and the global energy system.

Reminder:

For decades, OPEC, led by Saudi Arabia, regulated the market by managing production and using spare capacity. This helped smooth crises and maintain price balance. Weakening these mechanisms inevitably leads to higher volatility, especially amid rising geopolitical tensions.

The decline in the cartel’s influence is a long-term trend:

• OPEC’s share of global production has fallen from ~50% in the 1970s to about 35% last year;
• after the closure of the Strait of Hormuz in March, this dropped to 26%;
• the UAE, the fourth-largest producer within OPEC, exited after 60 years, opting for an independent strategy—intensifying internal tensions in the Persian Gulf;
• over 40 days of conflict, dozens of energy infrastructure facilities were attacked: tankers, fields, refineries, pipelines, and storage sites;
• military actions halted about 10 million barrels per day of production, while Saudi Arabia and the UAE were forced to partially redirect exports outside the Persian Gulf region.

An additional factor is developments in Venezuela: after a change of power, the U.S. gained control over the country’s oil sector, redirecting a significant portion of exports to its advantage and opening access to the world’s largest reserves for Western companies.

The blockade of the Strait of Hormuz has effectively deprived key OPEC members—Saudi Arabia, the UAE, Kuwait, and Iraq—of their main export route, sharply limiting their influence during the largest oil crisis.

Against this backdrop, the U.S. oil and gas sector has gained the opportunity to increase supplies to Europe and Asia, further reducing OPEC’s market share.

Riyadh will likely attempt to stabilize the situation and strengthen coordination, including cooperation with Russia. However, the current political context, including the conflict with Iran, significantly limits room for maneuver.

The weakening of OPEC is pushing the oil market into a state of heightened instability. The loss of a coordination center increases price volatility and reduces the effectiveness of crisis-management mechanisms. A new control model is emerging, with the U.S. aiming to take a leading role. However, such a transformation is unlikely to benefit either producers or consumers.

So we act wisely and avoid unnecessary risks.

Profits to y’all!