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OPEC: The Search For The Unstable Equilibrium
OPEC: The Search For The Unstable Equilibrium In the prime of OPEC, the price of oil was so high, and $ 150 a barrel was not uncommon.
Yazar: Tom Roberts
Yayınlanma: 13 Eylül 2020 03:36
Güncellenme: 21 Kasım 2024 21:20
OPEC: The Search For The Unstable Equilibrium
In the prime of OPEC, the price of oil was so high, and $ 150 a barrel was not uncommon. In the first weeks of September of this year, the barrel price of oil from the so-called North Sea Brent, for example, does not even come close to 40 dollars. There are worlds in between. But not only the price is a signal for radical change: six decades ago a unified cartel of oil-producing countries successfully opposed the then overpowering oil companies, the so-called "Seven Sisters". Today the oil market is characterized "by a permanently unstable equilibrium", according to an analysis by the magazine Le Monde diplomatique. Because today OPEC is far from having a dominant influence on the oil market. Initially there were only a few founding members: Iraq, Iran, Kuwait, Saudi Arabia and Venezuela. Eight more oil countries were soon added; today the actual cartel consists of 13 countries. In nominal terms, they hold more than three quarters of the world's oil reserves. Perhaps more importantly, around 40 percent of current oil production comes from OPEC countries.Cheaper than water
How difficult this is under today's conditions became apparent this spring in the middle of the Corona crisis, when oil suddenly seemed cheaper than water: On April 21, the price of a barrel fell below zero. Suddenly, producing countries had to pay 37.63 dollars per barrel (!) In order to get rid of the raw material for which there was no longer enough storage space. Saudi Arabia started a price war without involving the other OPEC countries and without informing the USA. The result - in the middle of Corona times - a rapid drop in prices, the consequences of which can still be felt today.
"Peak of demand"
But unlike OPEC with its crude oil, the oil companies can change course - they mutate into an energy company, respond to the climate crisis and increasingly rely on renewable energy sources. While not long ago there was talk of peak oil, the expected end of fossil fuels, today it is said to be peak of demand, the near turnaround towards less demand. That weakens the market power of the oil producers and thus above all of OPEC.
Experts like Andreas Goldthau from the University of Erfurt are rather skeptical about the future of Opec. "These clubs are not forever." But there are still major customers like China - with 13.5 percent of global demand, it is now the largest consumer of crude oil. OPEC itself has therefore assumed a significant increase in global oil demand at least until 2040 - driven by countries such as China and India as well as the need for plastics. At the same time, China invests more than any other country in renewable energies and already operates more than half of all solar panels and wind turbines in the world.
So 60 years after its founding, Opec, dominated by Saudi Arabia, is just one player among others. A powerful player, but together with the others on the constant search for an unstable equilibrium.
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