- The lack of cooperation and decreasing oil demand growth may lead to the downfall of OPEC+, a group that generates 40% of the world's crude oil.
- As per expert Per Lekander, the collapse of the OPEC+ could result in oil prices plunging to as low as $35 per barrel.
- Despite claims of focusing on global supply inventories, many OPEC+ member nations dependent on fossil fuel revenues, use oil price assumptions in their national budget plans.
The precarious balance of a powerful oil producers' alliance may come crashing down if consensus regarding production policy unravels. This was according to Per Lekander, managing partner at the investment group, Clean Energy Transition.
Lekander spoke to CNBC's "Street Signs Europe", expressing concerns that declining oil demand growth coupled with dwindling cooperation could spell doom for OPEC+. Comprising 23 countries, OPEC+ is responsible for producing nearly 40% of the world's crude oil.
Lekander warned of a potential fallout of OPEC+ that could plummet oil prices to a staggering low of $35 per barrel. He explained that unlike in a growing market, a declining market calls for constant production cutbacks. Lekander suggested that if this lack of growth coupled with lessening cooperation continues, the inevitable end of OPEC+ might be closer than expected.
No comments were available from a spokesperson for OPEC at the time. OPEC+ has been reducing oil production since November. However, oil prices have been down significantly year-to-date, with a small increase seen on Thursday afternoon.
OPEC+ has been trying to distance itself from accusations of cartel behavior, claiming their policies are focused on global supply inventories rather than fixed prices. However, it's important to note that Middle Eastern nations in the coalition, largely dependent on fossil fuel revenues, do include oil price assumptions in their national budget plans.
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