/>iThere have been many changes recently, but one of the changes on the forefront of my mind has been “what is going on with OPEC”? It feels like a major shift has happened with The Organization of the Petroleum Exporting Countries (“OPEC”).
Background
By way of a short reminder, OPEC has been around since 1960 – in fact, this year marks the 60th year since its founding. Its mission is:
“to coordinate and unify the petroleum policies of its Member Countries and to ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.”
There are 13 member countries including Saudi Arabia.
Current Status
According to the Investopedia article entitled, OPEC vs the U.S.: Who Controls Oil Prices, “OPEC controls oil prices through its pricing-over-volume strategy.”
Now, there is a big question mark behind that sentence. OPEC allegedly controls oil prices, but we all know that many other factors impact the equation as well, including global politics, supply and demand and technology.
Stability has historically been the primary goal of OPEC, but recent events have turned oil prices and supply on their heads. The recent headlines indicate that a shift has happened in OPEC:
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Bloomberg Opinion: The End of OPEC is Here
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OilPrice: OPEC+ Scraps Meeting as Oil War Heats Up
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Reuters: Oil Slumps Below $30 a barrel as Coronavirus Spreads, OPEC Rancor Remains Elevated
What does this mean for OPEC? Has OPEC lost its grip and with it, its purpose and utility? Only time will tell.
