Who Knew? OPEC Actually Matters Again

Donald L. Luskin
Michael Warren
Monday, June 6, 2016
No need for a freeze. OPEC is the swing producer again. Demand beats a path to its door.
Strategic view: 

Last week’s OPEC meeting produced no headlines, but it didn’t need to. Global petroleum demand is rising, and US production is falling. Only OPEC can fill the gap – suddenly, it is relevant again. Who needs a production freeze, when the post-sanction surge of Iranian production has crested, Nigeria and Venezuela are becoming more deeply impaired, and Libya and Iraq continue at risk? Oil will move higher, to as much as $65 this year. US shale producers will re-activate at that point, and inventory can cushion potential shortages in the meanwhile. But sentiment has changed – from glut to shortage.

Author Override: 
Michael Warren and Donald Luskin