12 January 2015 - 17:10
  • News ID: 232786

OPEC Still Effective

OPEC Still Effective

TEHRAN Jan 12(Shana)--In Response to an Article by Alireza Soltani on OPEC, which was published by Hamshahri newspaper in December 2014, I would like to express some points:

During the whole text of the article that was obscurely entitled as "OPEC Crossing OPEC", the writer believes that the era of OPEC has come to an end and tries to explain this assumption in his article implying that the organization is frail and is in its final days.

However, the majority of this is in effect contrary to how most oil and gas observers view the organization as the most successful intergovernmental organization in the third world and envisage a bright future for OPEC based on a number of reasons which follow:

During its 55-year history, the organization has left behind numerous crises and has managed to retain its influence on the oil and energy markets. In fact, the Gas Exporting Countries Forum (GECF) with its headquarters in Doha, Qatar, was formed to follow OPEC's example. So, it is still too soon to call OPEC's days off.

On the contrary, the data from international energy organizations suggest that OPEC's influence will be on the rise in coming years simply because of the enormous oil and gas reserves OPEC members states hold within their borders and the call for energy from great economic powers like China and Europe is predicted to grow in the future.

Even though the 166th Ministerial Meeting of OPEC was more or less a different meeting, we should not forget that the organization has already managed to take [appropriate] decisions in even more difficult situations and in some cases, like Jakarta meeting, has been able to correct its decision.

"OPEC Crossing OPEC" assumes that the organization would turn into asymbolic organization in not-so-far a future. But this  won’t be true so long as oil is the world's most crucial energy carrier and OPEC member states enjoy the largest oil reserves.

Regarding disunity in OPEC, one should never forget that joining the organization is subject to a voluntarily process and based on the will and interests of the members, as is stepping out of the body; this is to say that being a member in OPEC is still beneficial for its members as oil experts maintain that without existence of OPEC  oil prices could have plunged to less than $25 a barrel and in this case it was not economical for the producers to withdraw it from their reserves. Existence of OPEC provides the opportunity for its members to shore up prices through reaching consensus on cutting production as it was the case in 2009  in OPEC meeting in Algeria.

The abundance of quality analyses, articles and news stories released every day and month on OPEC and its decisions is yet another indication of the strategic significance of the organization in world economic and energy markets as well.

 
That numerous news pieces, reports and analyses are being published about OPEC somehow implies the importance of the place of the organization in world energy markets as well as world economy. So, we as Iranians should not make the mistake by announcing that OPEC has lost its influence or it is an ineffective body.  

The respected writer of the article has tried to announce that “those members backing oil reduction in the organization have followed those members who are against cutting production, just simply because they regard cutting production policy as passive with short-lived effects”. In response I would like to say that this view is far from reality. Because both those who were of the opinion that OPEC should cut production and those who opposed the view, believed that their stances meet the interests of the members in the best way. But since they could reach consensus, they decided to maintain an agreement they had reached earlier and was in place in 2011.

At the end of the article, the writer believes in that OPEC members have lost their hope for having any impact on world oil markets. Fortunately, this is not true either. Furthermore, the writer neither suggests any solution nor says what OPEC members, including Iran, should do to influence the markets.

And finally I would like to announce that just criticizing the performance of the states and international organizations is very simple, but what is most needed now is a concrete and expertise view.   

By Mehdi Asali

News ID 232786

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