OPEC+ Losing Grip on Oil Market Pricing Power

The global oil market is undergoing a significant shift in its pricing logic, with OPEC+ no longer dominating supply-side decisions. According to Reuters calculations based on International Energy Agency (IEA) data, OPEC+'s share of global oil production fell to approximately 40% in July, down from above 48% before the Middle East conflict in late February.

The decline is largely attributed to the United Arab Emirates' decision to exit OPEC in May, contributing roughly four to five percentage points to the drop. As a result, OPEC+'s production decisions are becoming increasingly less capable of moving oil prices.

The shift in market power is being driven by both cyclical and structural factors, including rising electric vehicle penetration and contraction in global oil demand. The latter has become one of the key factors enabling the oil market to rebalance supply and demand, effectively offsetting part of the supply gap while capping the upside for oil prices.

The demand side is acquiring a new level of influence, with changes in demand becoming a critical variable influencing the global supply-demand balance. This is evident from the fact that even large-scale supply disruptions may not necessarily lead to a sustained supply deficit due to slowing demand growth.