For many years, and particularly since the Autumn and Winter of 2014 the world oil price has been heavily influenced by the behaviour of OPEC – the Organisation of Petroleum Exporting Countries, which has, since 1960, and before the Cold War, regulated the production of now 13 countries which together account for some 40% of the daily global oil production.
It is actually the behaviour of Saudi Arabia – which accounts for about 11.6million barrels of daily oil production – which is about a quarter of OPEC’s total production and three times larger than its nearest OPEC rivals – Iran and the UAE – which has dominated the OPEC narrative.
Back at its foundation OPEC’s stated mission was “to coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.”
However, as with so many aspects of the modern world, old orders are being re-examined, the people who think they are in power are not necessarily in power (they may be) and a new order, different and dynamic, is emerging – more fluid and rapidly changing than any of us have experienced in our lifetimes. And in OPEC the stage is now set for change.
On its own admission, Saudi’s decision–making within OPEC is driven more by its own interest and not the good of OPEC as a whole. The damage being done to “passive onlooker” member nations by the Saudi position is already turning them into “active pragmatic” member nations, where, for example, a hitherto unlikely combination of just three other members on the other side of the geo-political spectrum from Saudi would result in an equivalent production level. Meanwhile, Russia, now a major player in post-Cold War global oil production, provides a third equivalent force.
There is no doubt that the signal of a cut in oil production from either of these non-Saudi groups would cause the oil price to rise. But there would be other consequences. It would mark the beginning of a decline in Saudi’s global influence, and it may usher in a new era when a new OPEC, which understood the limits of influence and the good of its members as a whole, came into being
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