• 4 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 7 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 11 minutes Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 14 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 2 hours Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 7 hours Trump needs to educate US companies and citizens on Chinese Communist Party and People's Liberation Army. This is real ECONOMIC WARFARE. To understand Chinese warfare read General Sun Tzu's "Art of War" . . . written 500 B.C.
  • 2 hours Old - New Kim: Nuclear Negotiations With U. S. Will Never Resume Unless Washington Changes Its Position
  • 2 hours Theresa May to Step Down
  • 2 hours Is $60/Bbl WTI still considered a break even for Shale Oil
  • 11 hours Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 1 hour India After Elections: Economy And Hindu Are The First Modi’s Challenges
  • 3 hours Total nonsense in climate debate
  • 9 hours Level-Headed Analysis of the Future of U.S. Shale Oil Industry
  • 14 mins Apple Boycott in China
  • 17 hours Asia Oil Refiners Mull Run Cuts With Margins At 16 yrs. Low For Season
  • 17 hours IMO 2020 could create fierce competition for scarce water resources
  • 16 hours ARAMCO BOARD: Former Dow Chemical CEO Andrew Liveris: I want to help Saudi Arabia become a 21st century economy
  • 17 hours IMO2020 To scrub or not to scrub
  • 16 hours Why is Strait of Hormuz the World's Most Important Oil Artery
Alt Text

Oil Markets Must Prepare For Maximum Fear

Oil prices this week are…

Alt Text

The Driving Force Behind Nigeria’s Energy Renaissance

Nigeria has traditionally been one…

Alt Text

Bearish EIA Data Sends Oil Lower

Oil fell on Wednesday morning,…

Cyril Widdershoven

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently, he holds several advisory positions with international think tanks in the Middle…

More Info

Trending Discussions

What Would A New OPEC Look Like?

The global oil market is going through a metamorphosis, and if the signs are right, a possible long-term partnership between OPEC and its former rivals, especially Russia, looks to be forming.

UAE Minister of Energy, and OPEC chairman, Al Mazrouie reported yesterday that Saudi Arabia has proposed a conference to institutionalize an OPEC and non-OPEC Alliance. Al Mazrouie indicated that there will be a cooperation agreement signed between non-OPEC, led by Russia, and OPEC in the next three months. Next to this, the UAE minister said that “the declaration of co-operation will be used as a base and will be hopefully finalized in the next three months”. 

Looking forward, more developments can be expected after the signing of the March 2019 agreement. With the Christmas season in mind, the statement indicates that for 2019 the “Three Kings” will not be meeting on the 7th of January (as the Christian Holy Calendar indicates) but the OPEC – Non-OPEC Kings will be waiting for another 2 months. A new child seems to be born that day, presenting the global oil market with a fait-a-compli only to be strengthened by a formal new organizational structure, ending the current OPEC producers alliance and replacing it with a much stronger NOPEC.

Analysts have already been talking about a full restructuring of the oil cartel for years, with some even predicting a doomsday scenario based on Peak Oil or Renewables. Others have been assessing the option of a new NOPEC, including Russia and others into the cartel. Al Mazrouie bluntly stated that he is unconcerned about exits from the group following Qatar's departure. The impact of members leaving the cartel in the last couple of years, with Qatar as the most recent example, is unlikely to erode the cartel’s influence on global oil markets. OPEC’s main producers, led by Saudi Arabia, already have been actively assessing and supporting a potential NOPEC approach for years. The importance of such a new alliance should not be underestimated. By taking Russia on board as a member, OPEC’s grip on the oil market would increase substantially, looking at the current Russian production volumes. By allowing minor producers, such as Qatar, to leave and at the same time sidelining Iran, the effective power is in the hands of the new Triumvirate (Riyadh, Abu Dhabi and Moscow). A possible inclusion of Russia, officially or unofficially, will increase the production levels of OPEC+ by around 11+ million bpd. At the same time, other options also still exist, as Azerbaijan, Egypt and others could be looking to join too. Related: Former Venezuelan General Takes Helm Of OPEC

A stronger NOPEC also will be able to diminish U.S. claims of energy market dominance. Already, U.S. president Trump’s claims are based on the wrong assumptions, as true energy dominance remains a long shot. Demand for OPEC oil continues to be strong and is predicted to increase in the next couple of years. At present, the real impact of U.S. energy and shale oil production is most likely overestimated by the media. Overall market fundamental power of U.S. shale oil is less, especially when taking into consideration that the U.S. has virtually no spare capacity. OPEC or NOPEC have an existing spare production capacity, and the capability to act as a swing producer to stabilize the market. U.S. shale does not have the same capabilities, based on technical and geological factors.

A stronger NOPEC is also needed to counter or mitigate the current market developments. OPEC’s current production cut agreement is NOT enough. To counter the market sentiment at present a real cut should be made of around 1.7-1.9 million bpd. This will not be taken for granted by the market, as most of the parties are still questioning the OPEC-Russia cooperation. When formalizing or institutionalizing the cooperation, maybe by a full membership of a new organization, statements are taken as a fact, not as a political view or media proposition. The new NOPEC could grow into a powerful organization which offers counterweight to a booming U.S. shale sector

By Cyril Widdershoven for Oilprice.com

More Top Reads Form Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News