- CNBC’s Jeff Currie, Goldman Sachs commodities chief, said Monday that “the old oil order” was back.
- He stated that OPEC was the only oil producer with the ability of pumping more crude.
- Currie said that this makes the oil company more powerful than ever in its 60-year history.
According to Goldman Sachs’ commodities chief Goldman Sachs, OPEC’s power has reached an all-time high as the oil organization considers cutting production at this week’s meeting.
According to reports, the Organization of the Petroleum Exporting Countries (OPEC) and its allies are A reduction of more that 1 million barrels per day is possibleThey will make a decision on Wednesday.
In Interview with CNBC MondayJeff Currie is Goldman’s global head in commodities research. He stated that OPEC has been incentivized to cut output because it is currently the only oil producer worldwide with space capacity.
“I like arguing that the old order for oil is back,” he stated. “OPEC probably is more powerful than ever in its 60-year history. One reason is that we haven’t been investing in alternative energy sources. They’re the only one in town.
Analysts have cited the UAE and Saudi Arabia as OPEC members with the most spare production capacity.
Despite the fact that the US shale boom of last decade weakened OPEC’s control over oil markets, domestic producers are now focusing more on returning capital to shareholders than pumping more oil. This has put the cartel back in control.
Now, it is showing its muscles again. Currie stated that OPEC cut production even though the oil market is tight and inventories are low. This is because crude prices have fallen upwards of 40% due to investors fleeing the market.
He stated that if OPEC is able to improve oil’s returns relative other assets, capital will return to the sector.
Currie also stated that the Federal Reserve is a player in oil market, as it continues to tighten its belt.
He stated that the Fed controls the financial story, they reduce liquidity but that the fundamental story is being driven OPEC, and they are potentially taking out the oil supply from the market. “So, it’s OPEC versus Fed at the moment.”
