Hormuz Reopening Threatens OPEC's Fading Grip on Oil Markets

The reopening of the Strait of Hormuz could be the undoing of OPEC's grip on the market, according to Ron Bousso. The Iran war and subsequent closure of the waterway have sharply diminished output from the Organization of the Petroleum Exporting Countries.

OPEC's production collapsed to an average 20 million bpd in April from 31 million in February, a drop of 35%. Its share of global production has dropped to an all-time low of around 22%.

Riyadh's options for countering these changes are limited. The kingdom is far from clear when the strait will reopen or what conditions will look like when it does.

The reopening could lead to a flood of oil onto the market, eroding OPEC's already fragile grip on the market. Saudi Arabia, Bahrain, the UAE, Qatar, Kuwait, Iraq, and Iran will all seek to maximise oil exports to plug the vast fiscal holes created by the conflict.