Friday , September 30 2022

Saudi Arabia is studying a scenario for a world without OPEC ::


Saudi Arabia is studying a scenario for a world without OPEC

Can OPEC End? Photo: Reuters

The state-funded Saudi Analytical Center is exploring the possible oil market impact of a possible disintegration of the Organization of Petroleum Exporting Countries (OPEC).

The study is under pressure from the country, which has been the leader of the partnership for nearly 60 years, including US President Donald Trump. He accuses OPEC of maintaining high prices for "black gold," the Wall Street Journal reported.

And although Adam Seiminski, the analyst center chairman, claims the study is not related to Trump's statements, a senior consultant familiar with the project, says it is an opportunity to take Washington's criticism into account. Depending on the findings, the study could offer protection for its partnership and role in Saudi Arabia.

Also, sources in the newspaper say the draft does not reflect an active discussion in the government about whether to leave the organization in the short term.

According to the report, the report is part of a broader review of the role of OPEC among the top government officials of Riyadh. The authorities of the country – as well as more and more representatives of the oil industry – are considering options for the moment when oil demand will peak.

Against this background, the study is considered by politicians as an exercise to play options for how markets can react if demand drops to such an extent that OPEC will lose influence and dissolve, high-ranking advisor says.

For decades, Saudi Arabia and other cooperative states have claimed to be an important international economic institution – a forum in which countries can adapt their production and maintain their prices at a steady level.

Graphics: Wall Street Journal

At the same time, critics accuse OPEC of manipulating prices at the expense of large oil users, such as the United States, where a group of lawmakers is proposing a law defining the organization as an illegal cartel.

The study is part of a series of others and has been drafted following a previous report that OPEC's excess production capacity reduces price volatility and generates up to $ 200 billion. Dollars annual benefits to the global economy, according to Bloomberg.

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