ASX 200 energy shares slip as cracks appear in OPEC unity

S&P/ASX 200 Index (ASX: XJO) energy shares Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO) are sliding today.

In afternoon trade on Monday, the ASX 200 is down 0.3%.

Both ASX 200 energy shares are underperforming the benchmark index, with Woodside shares down 1.0% and Santos shares down 1.4% at this same time.

Investors could be favouring their sell buttons today after the oil price retreated over the weekend.

Brent crude oil is down 0.3% at US$82.52 per barrel at time of writing, having recouped some of its earlier intraday losses.

That sees the oil price down almost 8% since 26 April, when that same barrel of Brent was fetching US$89.50.

Here's what's happening.

Is Iraq pressuring ASX 200 energy shares?

Some of the pressure on the oil price and ASX 200 energy shares looks to be driven by potential disunity within the Organization of the Petroleum Exporting Countries and its allies (OPEC+).

OPEC+ is scheduled to meet on 1 June to discuss production levels for the second half of the year.

While most analysts believe the cartel will extend its current cuts, Iraq threw those assumptions into doubt over the weekend.

The nation, which counts as the second biggest oil producer in OPEC, has already been producing more than it previously agreed to under existing quotas.

And Iraqi oil Minister Hayyan Abdul Ghani fuelled concerns among oil bulls when he said Iraq would not sign up for any more cuts at the June meeting.

"No, I think Iraq has cut enough and will not agree to any other cut," he said when asked about extending the OPEC restrictions (quoted by Bloomberg).

Iraq's deputy oil Minister Basim Mohammed Khudair later tried to smooth the waters, saying his nation is "committed to the voluntary reduction decision within the deadline set by OPEC and its allies".

So far this month, Iraq has been exporting 3.4 million barrels of oil per day, exceeding the 3.3 million barrels per day production cap it agreed to in March.

Commenting on the outlook for the oil price, and by connection ASX 200 energy shares, Vandana Hari, founder of Vanda Insights said, "I do expect crude to remain under some downward pressure, as the Gaza-related geopolitical risk premium continues to fade."

Hari was not fussed about the Iraqi oil minister's reticence about extending supply cuts, calling the issue a "storm in a teacup".

What else is impacting the oil price?

Headwinds impacting the oil price and pressuring ASX energy shares like Woodside and Santos today have also been blowing out of the world's top two economies.

In China, the government's latest inflation and credit data pointed to ongoing economic malaise in the world's number two economy and top oil importer, which bodes poorly for the medium-term energy demand outlook.

Meanwhile in the United States, it's the resilient economy that has some analysts forecasting headwinds for the oil price. That's because the strong economy is likely to entrench inflation further and push out any interest rate cut from the Federal Reserve into late 2024 or even next year.

This, in turn, could stimmy the growth in energy demand needed to boost prices and turn these headwinds into tailwinds for ASX 200 energy shares.