OPEC Grows In Power Before Oil Cuts Hit

The Organization of the Petroleum Exporting Countries (OPEC) is expected to conduct its annual strategy meeting this week confident in its increasing short-term influence. 

As recently as 2019, the US became a net exporter of energy for the first time in 70 years, showing its refusal to rely on the oil block.

Now, after stricter carbon emissions targets agreed upon at COP26, OPEC is gaining strength as energy transition gathers pace and countries look for their last binge of fossil fuels before concentrating on meeting net-zero emissions targets.

Recently, OPEC refused US President Biden’s request to increase production to help reduce the global price of oil. This showed the group’s muscle.

Under climate pledges made this year, the world will reduce its daily demand for oil barrels per day by as much as 25% by 2050. However, it is expected that OPEC will have one last period of sway over the oil markets. 

What does this mean for me?

Oil is facing an important period. After demand dipped at the height of the pandemic due to a lack of manufacturing and travel, demand is steadily rising.  

Prices for products like natural gas, gasoline and diesel have all climbed steeply. As a trader, you would be advised to keep an eye on oil prices in the short- to medium-term. This key commodity continues to play a vital role in global markets. You can take your investment cues from its pre-eminence.