(Bloomberg) -- Since Saudi Arabia and Russia forged their historic agreement in 2016, OPEC’s production cuts have been the key driving force of the oil market. Not any more.
U.S. benchmark West Texas Intermediate crude has jumped 5.9 percent since markets opened on Tuesday. That’s the biggest two-day gain since Dec. 1, 2016, the day after the Organization of Petroleum Exporting Countries agreed its output cuts.
Wednesday’s price surge was triggered by U.S. President Donald Trump’s pledge to attack Syria -- potentially putting America in direct conflict with Russian forces -- and another volley of missiles aimed at the Saudi capital from Yemen.
Beyond the immediate threat of conflict in the Middle East, there are broader signs that OPEC is losing influence over oil prices due to geopolitical events beyond its control. The economic crisis in Venezuela and the re-imposition of U.S. sanctions on Iran could involuntarily double the size of the group’s agreed cuts by year-end, with further potential to send prices spiraling higher.
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