Taking control of its own destiny after the deep crisis it went through around 1998, the Organization of Petroleum Exporting Countries (OPEC) has since undergone restructuring and regained its prominent position. However, there are signs on the wall now that OPEC prominence has come to an end, according to Cyril Widdershoven of Global Energy Security Analysis (GESA).
The re-emergence of Iraq, the removal of several supra-regional threats and the ongoing increase in production and exploration in non-OPEC regions has put pressure on the oil cartel.
“The assumed stability of the international oil market is a very fragile one. For several years the market has performed an abnormal 'marionette-dance', OPEC pulling the strings and the consumers just abiding to the orders from Vienna,” explains Widdershoven.
“The cartel, as it is commonly denominated, given to it during the 1970s, has been through several crisis. The last one at the end of the 1990s threatened not only the economic and financial stability of its member countries but also the organization to the bone.”
“Still, deserters have been scarce, only during the start-up of the cartel two minor producing countries left the cartel, not due to their respective lack of common ideas but national interests and more practically, not enough leeway in the cartel itself.”
“Several analysts are predicting a renewed crisis in OPEC, due to new producing regions or the re-emergence of countries such as Russia, Mexico or Canada. OPEC's market share has fallen the last decade, at a rate not expected by most observers and players, but it doesn't represent the real impact and power of this, largely Middle Eastern based, production cartel,“ Widdershoven said.
“With the current annual rates of demand increase in the West, and especially emerging markets such as India and China, and current depletion rates of OECD-reserves, around 2010 OPEC's market share has to increase spectacularly. The latter not only because of overall increased demand, but additionally due to the depletion of proven reserves in the non-OPEC regions.”
“OPEC will need to deal with new threats: Iraq, Caspian, natural gas and international and global political-economic interests. If the cartel will be able to cope with these internal and external pressure cookers needs to be seen. However, it will be feasible to say OPEC has not yet seen its own sunset.”
“As a kind of Phoenix, it has reappeared from the ashes several times, with always a couple of new faces to shatter old paradigms. This time new faces will not be enough, but the old fox in Saudi Arabia is still able to outwit his opponents. Maybe a new lion will emerge in Baghdad, it has been a long-time that Iraq has been in the OPEC spotlights; maybe an Iraqi leader of OPEC will find more support in Washington, London and Brussels?”
Having refused to cut its 25.4 million bpd production quota at a special meeting in Qatar on June 11, OPEC has scheduled another meeting July 31 in Vienna to discuss worldwide oil output. The 11-nation organization is made up of Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates (UAE) and Venezuela. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
