The member countries of OPEC+ group could be close to breaking up, according to Per Lekander, a managing partner of the Clean Energy Transition investment group Speaking to “Street Signs Europe” on CNBC, Ledanker has said that he believes this could send oil prices down to $35 per barrel.
The OPEC+ group comprises the 13 members of OPEC plus 10 other oil-producing countries that came together in 2016 to control production levels. Together they account for 40% of the world’s crude oil production, with the remainder being produced in places like the US by companies such as ExxonMobil, the maker of the Mobil lubricant range.
Lekander believes that with cooperation among OPEC+ starting to falter and the demand for crude oil growing sluggishly, the coalition could break down. He said about this:
“The more negative growth [there] is, and the less cooperation you have—and remember the last OPEC decision, it was really the Saudis doing it on their own—so I would say, if my forecast is correct, and I’m very sure it is, it is going to break.”
He said that the price of oil has been kept artificially high since 1974, other than some periods when an abundance of supply made it impossible to elevate prices. Lekander believes that once OPEC+ can no longer function as a cartel, prices will drop to $35 per barrel before stabilising at $45 in the medium term. For its part, OPEC+ usually insists its interventions are aimed at balancing global inventories rather than trying to achieve a specific price.