OPEC's Grip on Oil Exports Slipping Amid Global Turmoil

OPEC's dominance in global oil exports is slowly unraveling as tensions rise between member countries.

The Iran war has accelerated this decline, with non-OPEC countries increasing production to meet growing demand. The Strait of Hormuz being closed again was a major driver behind this surge, but OPEC's weakness was exposed during the weeks in June when the strait reopened.

Saudi Arabia's pipeline around the Strait of Hormuz has reduced concerns about Iranian bombs or mines, allowing them to maintain their production levels. However, other member countries such as Kuwait, Iraq, and Bahrain are trapped in the gulf and sold virtually nothing during the ceasefire.

This left multibillion-dollar holes in their budgets, leading them to request a 50% quota hike from Saudi Arabia. The Chinese slowdown and lower demand have also absorbed much of the war's oil shock, making it essential for OPEC to reduce production to prevent oil prices from crashing if a glut emerges.

The UAE has already announced its departure from OPEC, increasing its production levels. Other member countries such as Iraq and Kuwait could follow suit, further weakening OPEC's grip on global oil exports.