It is not often that labour trumps capital. Opec ministers, together handling the taps for a third of the world’s oil supply, represent the capitalists. Traders had hoped that this group, meeting in Doha over the weekend, might begin to close the spigot. But no agreement to freeze production could be reached, let alone a decision to make cuts. Come Monday, oil fell, and stock markets followed suit.
More effective were the efforts of labour, in the shape of striking state oil workers in Kuwait, Opec’s number five producer. While Opec ministers failed to take a single barrel off the market, a dispute over public sector wages has led to a reported loss of half of Kuwait’s 3m barrels per day of production. Even if the strike does not last long, 1.5m barrels per day is a lot — close to the equivalent of the US Permian region’s shale oil output.
A knee-jerk reaction of equity prices to the outcome of the Doha meeting makes little sense. There is little evidence that oil prices and major stock indices, such as the S&P 500, move together. Share prices soared when oil trod water above $100 per barrel up to mid-2014, and then initially went higher after oil halved.