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A current suspicion doing the rounds in the West is that OPEC, that price-setting cartel of oil-exporting countries, has finally lost its lever on prices---since it no longer has spare capacity as a strategic tool. Whether that is really true is not altogether clear, though. Moreover, the high state of oil prices (they nearly hit the psychological $50 per barrel recently) suggests that while the unified force of supply may not be in clear control, what has taken its place isn't another centrally organized entity. So all talk of a power shift in the oil business is simplistic at best. Does this mean that market forces are in charge of prices? Are natural factors getting the better of artificial ones? None of this is clear; the world's biggest oil supply zone is in such flux that old decision-making structures are in question. The world's biggest demand zone is not as stable as portrayed, either, come to think of it. Whatever equilibrium is struck, it would have to be one of mutual satisfaction.
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Oil
market watchers can be quite weird. Lately, though, they must be forgiven
new kinds of weirdness too. This is because the market has almost never
been so confusing. Speculators, quite evidently, have taken up all sorts
of positions (forward contracts have seen much activity), and
geo-political events and apprehensions have done their own bit to make any
analysis so fiendishly difficult.