One of the major surprises of 2025 was OPEC+ abandoning its longstanding efforts to support oil prices.

For years, OPEC acted as a reliable market backstop, carefully managing supply to maintain a price floor for crude. However, a combination of eroding market share and resilient production outside OPEC finally forced a strategic shift. There may also have been influence from US President Trump, which contributed to this abrupt change.

The shift began in spring 2025, when Saudi Arabia and its allies indicated they were no longer willing to bear the burden of production cuts while countries such as the US, Guyana, and Brazil continued to increase output to record levels. By mid-year, the alliance’s previous ‘price-over-volume’ policy was replaced by a more aggressive pursuit of market share, reminiscent of the 2014 price war.

Internal tensions escalated as several member countries, including Iraq and Kazakhstan, consistently overproduced their quotas. Frustrated by the lack of compliance, the core OPEC leadership decided to endure a period of lower prices as a ‘reset’ intended to enforce discipline in future agreements.

OPEC may have also aimed to penalise US shale producers — the main source of supply growth over the past decade — for their ‘drill, baby, drill’ approach.

On the market, West Texas Intermediate (WTI) crude recently fell $1.61 to $56.74 per barrel. This decline erased gains made earlier in the week and leaves oil prices flat for the week, near five-year lows.

Looking ahead to 2026, traders’ focus has shifted from when OPEC+ will cut output to how long the group can endure the fiscal strain of sub-$70 oil as it seeks to reassert dominance in the global energy market. Ultimately, the low-price environment tends to correct itself. US shale producers, having squeezed profits for years, are cutting drilling budgets and are unlikely to sustain operations below $60 WTI, given that costs have significantly outpaced crude prices since the Covid pandemic.

For forex traders, crude oil may represent a strong buying opportunity in 2026 — similar to the conditions seen in late 2020. The key question is timing. Some argue that the current market already prices in all excess oil supply and that global balances are healthier than expected. This view may gain traction if the market avoids a chaotic downturn through the winter.

The suggested strategy is to consider buying sharply lower prices below $40 or to wait until April, when seasonal factors typically improve oil demand.

Original Source: Adam Button of investinglive.com