Faced with continually declining oil prices, a noticeable rift has emerged within the Organization of the Petroleum Exporting Countries (OPEC). Iranian President Ebrahim Raisi called for member nations during a Vienna meeting to "demonstrate ironclad solidarity" in confronting potential new sanctions from the U.SHowever, this appeal was met with lukewarm supportThe Saudi Energy Minister, post-meeting, stated that "production policies will be adjusted based on actual market demand," suggesting that they might maintain current output levelsIn contrast, Iraq's Oil Minister publicly questioned the necessity of output cuts, asserting that "current market fluctuations are more attributable to speculative trades rather than fundamentals." This internal division has led to the compliance rate for OPEC+ joint production cuts falling from 115% last year to 98%, further eroding market confidence in the organization’s ability to stabilize prices.

Alongside deteriorating fundamentals, speculative behavior in financial markets has exacerbated price volatility

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Data from the Commodity Futures Trading Commission shows that hedge funds have reduced their net long positions in WTI crude oil for four consecutive weeks, with a cumulative cut of 23%. The self-reinforcing mechanism of quantitative trading models has created a 'liquidation effect'; when oil prices breach critical support levels, massive stop-loss orders are automatically triggered, leading to a rapid drop in prices—in one instance, a $1.2 price drop occurred within just 15 minutesThis vicious technical cycle has resulted in oil prices plummeting by over 7% across just five trading days, marking the largest weekly decline since December 2024.

In this profound adjustment of the global energy landscape, governments, energy companies, and investors are grappling with unprecedented challengesThe survival threshold for U.S. shale oil producers has been compressed to $65 per barrelIf prices remain low, this could trigger a new wave of consolidation within the industryMajor European oil companies are accelerating their shift towards renewable energy, with BP planning to raise its investment in clean energy to 40% by 2025. For emerging market nations, low oil prices present an opportunity to lower import costs but may also delay the transformation of their energy structure

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