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.
Of course, new players in the energy-production game could conceivably deal a blow to Saudi Arabia. But, so far, the Kingdom has managed to avoid serious injury.