OPEC's Weakened Grip on Oil Prices Unlikely to Hold Amid Hormuz Reopening

The reopening of the Strait of Hormuz could be OPEC's undoing, according to Ron Bousso. The strait's closure has already had a significant impact on global oil supplies, with Middle East exports dropping by around 13% since the start of the war in February.

This represents more than $80 billion in lost revenue for the region's producers, who are eager to plug their fiscal holes and maximise oil exports. However, the recovery will be bumpy, with supply and demand unlikely to recover in sync.

The UAE's decision to quit OPEC earlier this year has further weakened the cartel, which is struggling to regain its grip on the market. Saudi Arabia's own wartime actions have also undermined its leverage, as it diverted more than 60% of its exports through the Red Sea during the conflict.

This could lead to a surplus of around 5 million barrels per day in the months following a full reopening of Hormuz, according to Rystad Energy analyst Jorge Leon. Producers outside the Gulf have solidified their market positions during the crisis, making it harder for Gulf producers to reclaim lost share without aggressive pricing.