The Opec headquarters in Vienna. Many factors are being used to put an end to Opec, and thus deprive the oil-exporting countries of one of the most important means of defending their interests. Image Credit: Bloomberg

Speculation about the potential disintegration of the Organisation of Petroleum Exporting Countries (Opec) has been growing over the last few months.

When Opec was founded in Baghdad, Iraq, 50 years ago its aim was to manage the supply of oil and set oil prices on the world market in order to ensure stability and avoid fluctuations that may affect the economies of both exporting and importing countries.

Throughout its history, the oil bloc has been through difficulties and problems, but never has it reached such levels of disagreement that it reached recently.

Lately, Opec's influence on the market has been widely criticised as the talk has increased on the looming disintegration of the global oil body.

This indicates a deep chasm and divergence among Opec members, which in return has prompted oil consumer countries to escalate pressure on the organisation through the International Energy Agency (IEA).

The agency recently resorted to pumping 60 million barrels from its strategic oil stocks, which resulted in a price drop and exchange of accusations and counter-accusation between the member countries of the organisation.

Raising questions

In light of these developments, the question whether Opec has become dated is valid one.

Another question is whether there are global and regional developments behind the recent discrepancies and disagreements among member countries?

If yes, have these developments predominated over the common interests of these countries falling within the scope of Opec?

Bear in mind that the coherence of Opec members has helped oil-producing countries achieve significant gains over the past five decades.

A few decades later, Opec stepped in to protect oil prices and fix them at fair levels, helping member countries and oil exporting countries to get huge returns.

The IEA resolution to pump in 60 million barrels came after it failed three weeks ago to convince Opec members to increase oil output.

The move aimed to compensate for the significant drop in Libya's oil production.

Many factors are being used to put an end to Opec, and thus deprive the oil-exporting countries of one of the most important means of defending their interests in the realm of international economic relations.

The first factor sometimes used to put an end to Opec relates to events happening in the region that led to a deterioration in the oil industry and the absence of government control as is the case in Libya and Iraq.

These regional events also led to increasing differences between the member countries, which reflect negatively on the organisation.

The second factor is the quest by some consumer countries to take advantage of the current conditions to dismantle the organisation, which is viewed by these countries as a historical rival.

This is because these countries tried to compel Opec to respond to their interests as represented in the policies of the agency (IEA) which was founded in 1974, despite the fact that Opec and the agency arrived at an understanding in the past few years.

The third factor lies in the quest of consumer countries to re-shape the relationship of the global oil industry to reflect the interests of the new arrangement of international relations.

As a result, national oil companies in producing countries recently lost some of their positions in favour of international companies.

All these developments indicate that there is an intense struggle over Opec and oil in general which is expected to become more severe.

In all cases, the status of Opec is totally different from organisations in the developing world, since Opec is directly linked to the most important global commodity upon which all economies rely.


Depending on this commodity are also developing countries which still have a long way to go to catch up with developed countries in economic and social development.

Therefore, Opec members should put aside or at least reduce their differences during next week's meeting in order to reach agreement.

Failing to do so will not only jeopardise Opec but also all its members.

It will lead to a deterioration in the national oil industry in developing countries in general and members of Opec in particular.

- Dr Mohammad Al Asoomi is a UAE economic expert.