It’s Official: OPEC Wants $100 Oil

Today’s relatively low oil prices – far below the March peaks – are unlikely to be sustained. The reversal by OPEC of the expanded quotas in the wake of Biden’s visit signals the cartel wants higher prices, and has abandoned its policy of worrying about historically tight OECD stocks. This implies a cartel price objective of something like $100 Brent. Whatever effect the release of oil from the US Strategic Reserve might have had has run its course. The reserves implicit in US drilled but uncompleted wells are gone, too. Yet the administration continues to discourage exploration and new production. Tight supplies from Russia and Saudi began well before the invasion of Ukraine. Russia is pivoting away from Europe and the developing world as its export market, preferring developing economies not committed to utopian dreams of decarbonization.