Tuesday , January 19 2021

Saudi Arabia is studying a scenario for a world without OPEC :: Investor.bg



Saudi Arabia is studying a scenario for a world without OPEC

Can OPEC finish? Photo: Reuters

The state-funded Saudi Analytical Center investigates the possible effects on the oil market due to a possible breakdown of the Organization of Petroleum Exporting Countries (OPEC).

The study is under pressure from the country, which has been the leader of the cartel 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, chairman of the analysis center, says the study is not related to Trump's statements, a senior counselor familiar with the project, he says it's an opportunity to consider Washington's criticism. Depending on the findings, the study could provide protection for the cartel and Saudi role.

Also, the newspaper sources say the project does not reflect an active debate in the government about the possibility of leaving the organization in the short term.

According to the report, the report is part of a wider rethinking of OPEC's role among top government officials in Riyadh. Authorities in the country – as well as more and more representatives of the oil industry – are considering options for when demand for oil will peak.

In this context, the study is considered among state people as an exercise to play options for how markets can react if demand drops to such an extent that OPEC will lose influence and will disappear, the high councilor stresses.

For decades, Saudi Arabia and the other states of the deal have argued that it is an important international economic institution – a forum for countries to adapt their production and keep prices stable.

Graphics: Wall Street Journal

At the same time, critics accuse OPEC of manipulating prices at the expense of big oil consumers, such as the United States, where a group of lawmakers propose a law defining the organization as an illegal card.

The study is part of a number of others and was developed after a previous report found that OPEC's spare capacity reduces price volatility and generates annual benefits for the global economy of up to $ 200 billion, according to Bloomberg.


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