The Death of OPEC
Saudi Arabia killed OPEC, and there is no reviving it. But, as competition in energy markets shifts from crude to refined products, new opportunities for cooperation are likely to emerge, resulting in a more efficient and resilient global energy market.
IRVING, TEXAS – The Organization of the Petroleum Exporting Countries is dead. Saudi Arabia killed it. Now, OPEC is just a toothless zombie, attracting attention, but without having any impact on the living.
Few have noticed OPEC’s demise for a simple reason: it never really had the impact that it was widely perceived to have. It was never actually a cartel, possessing monopolistic market power. Anyone who thought otherwise was mistakenly attributing to it Saudi Arabia’s market power.
And Saudi Arabia’s power is expansive. It remains the dominant producer in world oil markets, and its political and economic decisions shape global energy economics. This impact will be intensified if the Kingdom resurrects Arab Light as the global benchmark crude.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
Already have an account or want to create one? Log in