Publications: Notes at the Margin

Zero Sum Game: OPEC vs. Refiners (June 3, 2024)

 

Ministers from OPEC+ nations agreed on June 2 to extend their current production cuts. According to Amrita Sen of Energy Aspects, the deal “keeps OPEC+ in charge of the market.”[i]

 

Sen is wrong. OPEC has long since lost control. Today, independent refiners and the three largest trading companies—Glencore, Trafigura, and Vitol—rule the market following the latter’s acquisition of refining capacity. These firms have two important objectives: maintain low product prices to keep consumers addicted to oil and keep margins strong. To accomplish these ends, the trading companies will do whatever it takes to suppress crude prices.


[i] Fiona MacDonald, Grant Smith, and Selma El Wardany, “OPEC+ Extends Oil Cuts But Lays Out Plan to Bring Barrels Back,” Bloomberg, June 2, 2024 [https://tinyurl.com/3z8xfap8].

 

To receive the full report along with future issues of Notes at the Margin, please Contact Us or send us an Information Request for subscription information.