UNCERTAINTY, dissensions, political divide and lack of cohesion is gripping the Organisation of Petro­leum Exporting Countries (Opec). Interestingly, the issue dividing them at the moment is when to meet next?

This is embarrassing to say the least.

For almost a couple of weeks, some industry frie­nds, hard core, senior, well-respected energy analysts and commentators kept booking and then altering their visit plans to Vienna, hoping to see ‘Godot’ one day. Yet, they were finding it difficult in the midst of the ‘date’ debate.

In the latest example of how the bitter geopolitical rivalry between Saudi Arabia and Iran can cause gridlock within Opec and that too with only a couple of weeks remaining before they’re supposed to gather in Vienna. Opec and its allies are seen struggling to settle on a meeting date.

Opec+, as the alliance undertaking market supply corrections is known as, was earlier scheduled to meet on June 25 and 26. However, on the pretext of the upcoming G20 summit, late in June, the alliance’s largest non-member Russia wanted to move the Opec meeting to July. Saudi Arabia also had no problems in meeting the Russian request.

Yet, Iran, already in disagreement with Riyadh on a number of political fronts, disagreed with the proposal. Iranian oil minister, Bijan Zanganeh, in a letter seen by Reuters, said, “I disagree with the proposed changes in the dates. I have already tight commitment in that period and, moreover, no reason was provided on the urgency of giving consideration to this date change,” Zanganeh wrote.

Reportedly, Algeria and Kazakhstan also disagreed with moving the dates. Venezuela and Libya were also reportedly were oppo­sed to a schedule change.

Russia, a non-member, driving the Opec meeting date was simply embarrassing from the Opec viewpoint. “It is becoming really embarrassing,” Reuters quoted an Opec source as saying.

However, after scheduling and rescheduling the biannual gathering several times, finally, a compromise was made. Bloomberg reported the group’s president, the Venezuelan energy minister Manuel Quevedo managed to get the parties to agree to meet on July 1 and 2.

The month-long wrangling within the Opec over a date for its next meeting has highlighted the changing dynamics within the energy world.

In comments widely seen as directed towards Saudi Arabia, Zanganeh said this month that some Opec members had turned the group into a political hub against two other foun­ding members, namely Iran and Venezuela.

“I believe that these countries are taking Opec towards collapse, but we want Opec to be preserved,” he said. “These two countries will undermine this organisation by instigating infighting in Opec.”

All this is a far cry from the days when the Opec used to control the markets. For now, Russia seems on the driving seat. Opec needs full support from non-members including Russia not only to agree on a meeting date but also to adopt the course to impact the oil markets.

Another factor in the entire equation is the growing US shale output which is anticipated to top the Russian and Saudi output. Rystad Energy finds that the United States currently holds 293 billion barrels of recoverable oil resources. This is 20bn barrels more than Saudi Arabia and almost 100bn barrels more than Russia. As per the US Energy Information Agency, next year the U.S. production is set to surge to 13.38 million barrels per day.

The growing political divide among its members is taking its toll on Opec where Riyadh was once the dominating force within the organisation. People like Ahmad Zaki Yamani and Ali al-Naimi were the movers and shakers of the markets. Each word uttered by them was taken seriously.

Reporters tagging along Naimi, each day at dawn while he was on his habitual jogs, or in later years speed-walks, along Vienna’s Ring Road was a common scenario during the Vienna ministerial.

But this is no longer the case. Opec is no more unipolar. Courtesy the US shale revolution, decisions to influence the markets are no more within the grasp of Opec alone. Russia and the US are equally important players. The dynamics of the game has changed. The wrangling over the dates of its next ministerial is reflective of this changing dynamics of the energy world.

In the process, the Opec has lost some of its lustre. The growing political divide within the Opec has only hastened the process.

Published in Dawn, June 23rd, 2019

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