Crude’s recent sell-off is a grim reminder that OPEC’s management of the oil market isn’t foolproof. The group’s Dec. 7 decision to curb output among members and allied producers was supposed to prop up sinking prices. Instead, it resulted in the worst post-cut price decline in a decade.
Global marker Brent has fallen as much as 16 percent, or nearly $10 a barrel, following the cartel’s announcement that it would trim production by 1.2 million barrels a day. That’s only pressured crude’s nearly 40 percent slide from an October high.
Not since 2008 has oil suffered such a blow in the wake of an OPEC cut — when the cartel surprised the market with a series of curbs in the aftermath of the financial crisis. The final cut, in December 2008, saw oil sink as much as 18 percent.
Something similar happened in March 2001, when an OPEC deal to curb oil production caused an initial slide in prices. That’s unusual, though. Output limits implemented in 2002, 2004, 2006 and 2007 were largely effective, despite signs of an early sell-off in 2006.