Opec stares into the abyss

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The oil-price collapse has weakened Opec. The cartel is scrambling for a response

FACED WITH a depression in oil prices, Opec’s strategy has always been to cut production. But the cartel’s ability to effect a supply side rescue has, this time, been overwhelmed by the fundamental shifts under way in the global economy. Demand rules the game, and Opec’s cards are suddenly very weak.

Last month’s ministerial meeting implicitly acknowledged this. The group ruled out another immediate cut in supply, pinning its price hopes on a recovery in the world’s economy next year and tighter compliance this year with quotas it already has in place.

That strategy drops the ambition, announced at the December meeting in Oran