OPEC and Russia have historically managed to maintain tight control over oil prices, but that might be coming to an end.
Since last year, oil producing countries have cut back production in an attempt to offset dipping prices, withholding as much as 1.8 million barrels per day. Oil had reached a more than 10 year low, dropping to less than $30 a barrel.
Those efforts paid off, with prices rising to as much as $80 a barrel, or approximately $3 a gallon in the U.S.—a 25% increase from last year and the highest since 2014. But by last week, Saudi Arabia and Russia, as well as the U.S., all discussed the possibility of increasing production once again—which could ease prices and thus help head off a possible global economic downturn caused by high per-barrel costs. That talk lead to a dip in crude futures by Friday and extended into this week.
But while the OPEC countries and Russia have largely been successful in their efforts to control the oil market in the last year, this may soon be out of their hands.
Bob Parker, an investment committee member at Quilvest Wealth Management, told CNBC‘s Squawk Box Europe Monday that while these countries may have a “very strong vested interest” in keeping crude futures at $70-$80 a barrel, this number could soon reach $100.
With a growing economic crisis in Venezuela, the country, long a major oil producer, has dramatically decreased its crude production. Should a “complete collapse” take place, Parker suggests that $100 a barrel wouldn’t be out of the question.