Portfolio manager says OPEC+ alliance could break — sending oil prices down to $35 a barrel
An influential oil producers’ alliance could collapse if unity dissolves around output policy, according to the managing partner of investing group Clean Energy Transition.
Speaking to CNBC’s “Street Signs Europe” on Thursday, Per Lekander said waning oil demand growth and a lack of cooperation may facilitate the demise of OPEC+ — a group of 23 nations that produces roughly 40% of the world’s crude oil.
The breakup of OPEC+, Lekander said, could send oil prices careening to as low as $35 per barrel.
“In a growing market, time is your friend. You just need to wait a bit and things tighten up and improve,” Lekander said. “In a declining market, time is your enemy. You have to keep cutting, keep cutting, keep cutting.”
He added, “The more negative growth [there] is, and the less cooperation you have — and remember the last OPEC decision, it was really the Saudis doing it on their own … so I would say, if my forecast is correct, and I’m very sure it is … it is going to break.”
A spokesperson for OPEC was not immediately available to comment.
OPEC+ has been trimming oil production since November. Oil prices, which are down sharply year-to-date, were trading slightly higher on Thursday afternoon.
Brent crude futures with September expiry were up around 0.8% at $83.53 a barrel at around midday London time, while U.S. West Texas Intermediate crude futures with September delivery rose 1% to trade at $79.56 a barrel. Both contracts are up over 12% so far this month.
“There was a period in the 1990s and the 2000s where supply was so much, they couldn’t jack up the price, but for most of the time, the oil price since 1974 has been artificially too high,” Lekander said.
“If the cartel can’t operate, I would say short-term you go to $35 and mid-term probably $45,” he added.
The OPEC+ group has sought to distance itself from accusations of cartel behavior, saying its policies target global supply inventories, rather than specific fixed prices. Nevertheless, some Middle East nations in the coalition, which heavily depend on fossil fuel revenues, list oil price assumptions and forecasts in their national budget plans.
OPEC and allies
The Organization of Petroleum Exporting Countries was initially formed in 1960 by five founding members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The alliance rose to international prominence through the following decade and has gradually expanded. OPEC joined forces with 10 non-OPEC partners — including heavyweight Russia — to jointly agree production policy in 2016, informally creating the coalition known as OPEC+.
OPEC itself is actively seeking to recruit new members to the alliance, Secretary-General Haitham al-Ghais said in early July.
OPEC+ officials have frequently stressed the group’s unity in policy-making, although allied countries typically also vie to protect national interests when accepting output commitments. OPEC+ cooperation briefly ceased for one month in 2020, triggering a price war as Russia and Saudi Arabia flooded the market. The alliance later reunited in May of that year, agreeing stark production cuts to address the drop in global demand triggered by lower transport fuel consumption, after the onset of the Covid-19 pandemic. Since then, the OPEC+ alliance has been careful to telegraph unity in its decision-making, including in its voluntary production cuts.
In addition to their coalition commitments, several OPEC+ members are now carrying out 1.66 million barrels per day of discretionary output declines until the end of 2024. Saudi Arabia and Russia are further implementing an additional 1 million-barrels-per-day and a 500,000 barrels-per-day drop in their production and exports over July and August, respectively.
The U.S., which is not a member of the OPEC+ group, has repeatedly called on the alliance to pump more to help the global economy and has criticized Riyadh’s cooperation with Moscow following Russia’s full-scale invasion of Ukraine.
Saudi Arabia, meanwhile, has frequently ignored Washington’s demands and reportedly said earlier this month that it would do “whatever necessary” to support the market.
Both OPEC+ officials and the Paris-based International Energy Agency have signaled a potential supply crunch in the second half of the year, when the institutions anticipate a pickup in demand.
A technical committee of the OPEC+ group, the Joint Ministerial Monitoring Committee, will meet early next month to assess compliance and market fundamentals. The JMMC cannot change the existing OPEC+ policy, but it can call for a meeting of the group’s ministers to do so.
JackRabbit, the maker of pint-sized electric microbikes, is back with a new product designed to quickly recharge their batteries from pure, uncut photons mainlined into an e-bike directly from the sun. In true independent charging form, the Solar Charging Kit from JackRabbit keeps riders rolling even when there’s not a convenient AC outlet in sight.
Unveiled this week, the Solar Charging Kit consists of a single folding solar panel and a tiny voltage converter that is configured to output 42.0V, which is the exact voltage required by JackRabbit’s little e-bike batteries. There’s also an added USB-A and a USB-C charging port for powering other devices in addition to charging JackRabbit batteries.
“This Solar Charging Kit plugs directly into your bike,” explained the company, “letting you recharge without needing an outlet, but with a speed comparable to the charger that comes with the OG/OG2 (42V, 2A).”
That would mean the panel outputs around 80W of solar power, which the company says can recharge its batteries in just three hours. That fairly quick recharging speed is helped by the fact that JackRabbit’s batteries are a mere 151 Wh, or around a third of the size of most e-bike batteries.
If that sounds small, then you’re right – it is. But JackRabbit is all about going micro, offering barely 25 lb rideables that are easy to store and bring on adventures, even when they aren’t actually being ridden.
With small batteries that fit under the 160Wh limit for many airlines in the US, the batteries can be quickly charged and taken to the widest number of locations. And for riders that want to go further than a single 10-mile (16-km) battery will allow, extra batteries are small enough to fit a pants pocket. The company also offers much larger Rangebuster batteries, though they won’t pass by TSA and make it onto an airplane in your personal item.
It sounds like the Solar Chargking Kit should be able to charge up JackRabbit’s large RangeBuster batteries, though likely in more than three hours.
The $349 Solar Charging Kit is a bit pricier than building something similar yourself, but it’s also safer and more convenient than hacking together your own battery charger since it’s designed to work with JackRabbit’s batteries right out of the box.
Technically it’s only inteded for JackRabbit’s micro e-bikes (themselves technically seated scooters, even if they look and feel more like a typical bike), but it’d probably work for just about any 36V e-bike that requires 42.0V to charge.
This isn’t the first time we’ve seen solar charging kits for electric bikes, and it’s a trend that is certainly appreciated by outdoors and camping enthusiasts, festival goers, or anyone who finds themself and their bike spending extended periods in the great, sunny outdoors.
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Solar generated 11% of EU electricity in 2024, overtaking coal which fell below 10% for the first time, according to the European Electricity Review published today by think tank Ember.
EU gas generation declined for the fifth year in a row, and total fossil generation fell to a historic low.
“Fossil fuels are losing their grip on EU energy,” said Dr Chris Rosslowe, senior analyst and lead author of the report. “At the start of the European Green Deal in 2019, few thought the EU’s energy transition could be where it is today; wind and solar are pushing coal to the margins and forcing gas into structural decline.”
The European Electricity Review published today by global energy think tank Ember provides the first comprehensive overview of the EU power system in 2024. It analyzes full-year electricity generation and demand data for 2024 in all EU-27 countries to understand the region’s progress in transitioning from fossil fuels to clean electricity.
Wind and solar continue their meteoric rise in the EU
The EU power sector is undergoing a deep transformation spurred on by the European Green Deal. Solar generation (11%) overtook coal (10%) for the first time in 2024, as wind (17%) generated more electricity than gas (16%) for the second year in a row.
Strong solar growth, combined with a recovery of hydropower, pushed the share of renewables to nearly half of EU power generation (47%). Fossil fuels generated 29% of the EU’s electricity in 2024. In 2019, before the Green Deal, fossil fuels provided 39% of EU electricity, while renewables provided 34%.
Solar is growing in every EU country and more than half now have either no coal power or a share below 5% in their power mix. Coal has fallen from being the EU’s third-largest power source in 2019 to the sixth-largest in 2024, bringing the end into sight for the dirtiest fossil fuel. EU gas generation also declined for the fifth year in a row (-6%) despite a very small rebound in power demand (+1%).
The EU is reaping the benefits of reduced fossil fuel dependency
The surge in wind and solar generation has reduced the EU’s reliance on imported fossil fuels and its exposure to volatile prices since the energy crisis. Ember’s analysis found that without new wind and solar capacity added over the last five years, the EU would have imported an additional 92 billion cubic meters of fossil gas and 55 million tonnes of coal, costing €59 billion.
“While the EU’s electricity transition has moved faster than anyone expected in the last five years, further progress cannot be taken for granted,” continued Rosslowe. “Delivery needs to be accelerated particularly in the wind sector, which has faced unique challenges and a widening delivery gap. Between now and 2030, annual wind additions need to more than double compared to 2024 levels. However, the achievements of the past five years should instil confidence that, with continued drive and commitment, challenges can be overcome and a more secure energy future be achieved.”
Walburga Hemetsberger, CEO of SolarPower Europe said: “This milestone is about more than just climate action; it is a cornerstone of European energy security and industrial competitiveness. Renewables are steadily pushing fossil fuels to the margins, with solar leading the way. We now need more flexibility to kick-in, making sure the energy system is adapting to new realities: more storage and more smart electrification in heating, transport and industries.”
Read more: China installed a record capacity of solar and wind in 2024 – in numbers
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