The Anti-OPEC Movement May Do More Harm Than Good, Says OilPrice.com
It’s “disastrous” for the oil markets, the publication warns.
Irina Slav, a writer for OilPrice.com, wrote a critique of environmentalist Carl Pope’s opinion piece published on Bloomberg earlier in November. Slav pointed out the dangers of Pope’s “vision of an anti-OPEC grouping.”
The idea of an anti-OPEC+ group has been floated before, Slav recalled, particularly by Italy’s then-PM Mario Draghi. But the idea never really stuck because of the obvious consequence of OPEC retaliating. It has already gotten this far, much to the surprise and disappointment of the United States.
In his proposal, Pope begins with an assertion: “the idea that the US has no tool except a begging bowl to influence global oil prices is absurd.” He then suggests that if the bipartisan NOPEC bill that’s gaining momentum in Congress becomes law, the US would be able to start laying down punishments for OPEC+ members via fines, import tariffs, sanctions, and barring the access of national oil companies like Saudi’s Aramco and Russia’s Rosneft to public financial markets.
The problem here, Slav posits, is that Pope’s narrative ignores that 1) these ‘punishments’ may not carry actual weight as Rosneft is already heavily sanctioned and Aramco, unlike Chevron or Shell, doesn’t really rely on the public markets, and 2) hitting OPEC+ with punitive measures would mean that oil from the cartel would become more expensive — certainly “bad news for buyers,” including the US.
Pope proposes an alternative to OPEC — the Organization for Clean and Affordable Transportation or OCAT. The proposal could be construed at its best as hopeful, at worst, naive. It is a group made up of “responsible oil producers and consumers” with the US, Canada, and Norway as the producers, and everyone else except OPEC+ as the consumers. But Slav points out that these responsible producers can provide only a fraction of the supply needed for the energy transition.
The anti-OPEC movement makes a dangerous assumption: ”that the West can survive longer without OPEC+ oil than OPEC+ can survive without selling its oil to the West,” Slav wrote. “As we can see from what has been happening in Europe over the past few months, this is a highly questionable assumption.”
Information for this briefing was found via OilPrice.com, Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.