Contrary to popular belief, oil prices are not determined by a single country, company, or even one cartel. They are the outcome of a global tug-of-war between producers, traders, and policymakers — a market governed by both physics and human psychology, where the actions of a few major players can send ripples across the world within hours.

On November 2, OPEC+ announced a modest production increase of 137,000 barrels per day for December, while freezing any additional hikes through the first quarter of 2026 — a move that surprised many analysts who had expected continued caution.

At first glance, boosting output at a time when prices are under pressure seems counterintuitive. But this decision is less about short-term prices and more about market share and influence.

As Morningstar aptly put it: “Defending market share has now become more important than defending prices.”

This marks a familiar strategic shift among major producers. The world has seen this playbook before — in 2014 and 2020 — when Saudi Arabia and Russia opened the taps to push out high-cost competitors, particularly US shale producers.

Those rounds triggered sharp price declines, but OPEC+ aimed to reassert dominance over a market increasingly shaped by rising American output. While the 2014 campaign partly backfired (see: “OPEC’s Trillion-Dollar Mistake”), it succeeded in forcing many over-leveraged shale producers out of business.

The strategic logic behind a price war

At first, it may seem irrational for OPEC+ to drive prices down deliberately. Yet history shows that short-term pain can yield long-term control.

By enduring a period of lower prices, the cartel can squeeze out marginal producers with higher costs. Once those players retreat, OPEC+ can tighten supplies again and regain its pricing power.

The latest increase comes as US crude output hits a record 13.7 million barrels per day — a striking comeback underscoring the resilience of America’s shale industry, whose producers can ramp up drilling quickly when prices rise and shut down just as fast when they fall.

This flexibility has made the United States the world’s de facto swing producer, but it comes at a cost. Unlike OPEC+, which coordinates through collective agreements, US producers act independently. When dozens of companies simultaneously boost drilling in response to higher prices, the result is oversupply.

In other words, the very efficiency that makes shale powerful also limits its long-term impact.

OPEC+ understands this dynamic well. By modestly raising output now, it is signaling that it won’t surrender market share to US producers easily — even if that means tolerating prices around $75 a barrel instead of the $90 preferred by many members.

Beyond barrels: the psychology of pricing

Physical supply alone doesn’t dictate prices; sentiment and expectations play an ever-greater role.

In oil markets, expectations move faster than production.

If traders foresee even a modest surplus — say, half a million barrels a day — prices begin adjusting before those barrels actually hit the market.

Futures markets integrate factors such as inventories and exchange rates, forming a complex web of feedback loops.

When economic data point to weaker global demand, traders price it in immediately. Conversely, an event like a refinery fire in California or tensions in the Strait of Hormuz can move prices overnight — even if global supply remains unchanged.

That’s why oil markets often appear detached from fundamentals: they reflect not just today’s balance of supply and demand, but the collective expectations of millions of participants about tomorrow.

The new reality: shale versus the cartel

Over the past decade, the rise of US shale has reshaped the global energy landscape.

Where OPEC once moved prices with a single statement, its influence is now constrained by a faster, more agile US industry.

Yet America is not immune to pressure.

Shale production relies heavily on financial discipline and investor confidence — both of which erode quickly if prices fall below $70 per barrel.

Here lies OPEC+’s advantage: it can withstand lower prices longer than many independent US producers.

If Brent stabilizes between $75 and $85, that’s a comfortable range for OPEC+ — high enough to protect margins for energy majors and low enough to discourage a flood of new shale drilling.

But if a genuine surplus forms, a slide below $60 cannot be ruled out — testing the resilience of producers and policymakers alike.

What it means for consumers and investors

For consumers, this price war translates into volatility at the pump.

Fuel prices typically fall with a lag after crude declines — and they rarely drop as quickly as they rise.

For investors, understanding these dynamics is crucial. Energy stocks are among the most volatile in the market, reacting more to expectations about future prices than to current spot levels.

In a world oscillating between economic uncertainty, OPEC+ maneuvers, and record US output, volatility remains the only constant.

The most successful investors are those who grasp the forces shaping this battlefield.

Oil remains as much a geopolitical currency as an economic commodity — and as long as the contest between OPEC+ and US producers endures, the market will remain what it has always been:

a high-stakes arena ruled by patience, power, and price.

US stocks rose on Monday as investors grew optimistic that the longest government shutdown in US history is nearing its end.

The Senate made tangible progress after Republicans and Democrats reached an agreement on a bill to fund the government through January 30, paving the way to end the record shutdown that began in early October.

AI-related stocks also rebounded, with renewed demand for companies such as Nvidia and Broadcom, despite ongoing warnings about a potential correction on Wall Street.

As of 17:37 GMT, the Dow Jones Industrial Average rose 0.3% (145 points) to 47,133, the S&P 500 gained 1.1% (72 points) to 6,800, and the Nasdaq Composite jumped 1.8% (409 points) to 23,417.

Aluminum prices on the London Metal Exchange (LME) rose 1.7% to $2,895 per ton, supported by optimism over a potential reopening of the US government. The gains came after a group of Democratic senators expressed support for a deal to end the federal shutdown, boosting overall investor confidence.

Aluminum remains resilient after recently hitting a three-year high, driven by production cuts in China and sustained global demand. Analysts expect a supply deficit of around 1.8 million tons this year, as production outside China continues to decline. However, despite the upbeat sentiment, high producer margins may limit further price increases.

Alcoa: A major global player in the aluminum market

Alcoa Corp (AA) is a vertically integrated aluminum producer with operations spanning bauxite mining, alumina refining, and primary aluminum manufacturing. The company is the world’s largest bauxite miner and alumina refiner by output, and the eighth-largest aluminum producer globally. Its profitability is closely tied to commodity prices across the aluminum supply chain.

Alcoa was the world’s first mass aluminum producer, pioneering the Hall-Héroult smelting process in the 1880s, which made aluminum an affordable material worldwide. It became a publicly listed company in 1925. In 2016, Alcoa spun off its automotive and aerospace components division to focus on its core mining, smelting, and refining businesses. By mid-2024, the company acquired the remaining 40% stake in AWAC, giving it near-full ownership of its refining assets, alongside full control of its smelting operations.

Alcoa currently has a market capitalization of $10.06 billion and operates within the basic materials sector, specifically in metals and mining, positioning it as a key strategic player in the global aluminum market.

Bitcoin rose on Monday, tracking gains across risk assets as US lawmakers made progress toward ending the longest government shutdown in the nation’s history.

The world’s largest cryptocurrency climbed 4.3% to $106,330.9 by 12:06 a.m. Eastern Time (05:06 GMT).

Monday’s rally extended a weekend rebound driven by opportunistic buying after sharp losses in October and early November.

The token had entered bear-market territory last week, having fallen more than 20% from its record high set in early October. Bitcoin also led the broader crypto market sell-off and has repeatedly failed to break above the $110,000 level since mid-October.

Still, improving risk sentiment helped fuel its recovery, especially after the US and China reached a trade deal in late October.

US Senate makes progress on bill to end federal shutdown

Risk appetite strengthened Monday after the US Senate voted to advance a bill funding the government through January 30, 2026.

The motion passed 60-40 after eight Democratic senators agreed to a deal with Republicans.

The full Senate vote on the bill is expected soon.

Ending the shutdown — the longest in US history — is seen as boosting sentiment toward the world’s largest economy, particularly as the government resumes publishing key economic data.

It could also ease fears over the shutdown’s economic toll, which is estimated to have cost the US tens of billions of dollars last month.

Ripple surges on optimism over new funding round

Ripple’s token was among the top-performing altcoins, jumping more than 8% to $2.4570.

The gains followed optimism surrounding Ripple Labs’ successful $500 million funding round that valued the company at $40 billion.

The round came after Ripple denied recent rumors about plans for a public listing.

Investors also bet the company might use part of the new capital to repurchase its own token — a move viewed as bullish for prices.