OPEC Cobbles a Deal, But Cannot Hide Decline of Saudi Power

 

The Organization of Petroleum Exporting Countries was created by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela in 1960. OPEC now has 13 members. During the 1970s, oil prices quadrupled, but OPEC’s ability to set strict production limits and influence prices has slipped away in recent years. It took more than two years after the crash in oil prices for the oil producers, along with Russia, to finalize a deal to cut production levels, and Chris Miller, associate director of Yale University’s Grand Strategy Program, expresses doubt that the deal can hold. Saudi Arabia entered negotiations with little leverage. The country is responsible for 13 percent of global production, even as Russia and the United States are close behind with the help of advanced technologies. Saudi Arabia and other OPEC states depend on oil revenues for general operating budgets. Cheating on production limits is common. Rival Iran is trying to catch up after years of sanctions. Miller concludes that OPEC’s dominance of world oil markets has ended and that limits Saudi influence. – YaleGlobal

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