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After the recent oil crisis, Bahr al-Ulum asks: Does Iraq need OPEC?
- Time: 04/1420 2020 11:14:07
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{Dr. Ibrahim Bahr Al-Uloom} Mexico yesterday objected to the OPEC + decision to reduce 400 thousand barrels per day (b / d) of its estimated production of 1750 thousand b / d in the first stage, and expressed its initial approval of 100 thousand b / d, and kept the world tight to efforts Leaders in order to persuade her to accept the reduction rate. Forcing the American President to speak directly with his Mexican counterpart to persuade him to cooperate with the producing countries to pass the resolution promising compensation, and Mexico remains committed to determining its percentage of the reduction in proportion to its economic reality.
The strange thing is that Iraq is the worst victim in my decisions of the ninth of March and the tenth of April. The Saudi decision on the ninth of last March was an impromptu unilateral decision that affected the economies of all producing countries, where oil lost nearly 23% of its price, and this sharp decline in prices is the second of its kind in three decades, where the markets witnessed a decline greater than last month and about 32% It was precisely on January 17, 1991 when the international coalition launched the war against Iraq because of its invasion of Kuwait, so Iraq’s oil exports stopped until the implementation of the oil-for-lunch program in 1996, and some of the OPEC neighbors acquired Iraq’s share in the market.
Despite the damage suffered by Iraq last month due to the Saudi decision, the Iraqi voice participating in the meetings of the ninth of last March was absent from clarifying its position as a country occupying the second position in production, it was expected that Iraq would have a clear vision of what happened, whether negatively or positively, and be bold to direct Direct or indirect criticism to Saudi Arabia because of its decision taken without returning to OPEC members, which caused a collapse in the market, and Saudi Arabia acted as if it was the custodian of (minors)! With the rest of the organization.
Iraq should have claimed compensation for the loss caused to it by this hasty decision that neglected the interests of other OPEC countries and caused Iraq to lose half of its oil revenues. OPEC is a solidarity organization working to guarantee the interests of its members, and its decisions are supposed to be unanimous. As for Saudi Arabia being alone in the decision without at least understanding with Iraq as the second and most affected product, it is not justified. For Saudi Arabia to lead the OPEC as the largest producer, and its production constitutes 40% of the total production of its countries is acceptable provided that it maintains the interests of the OPEC countries and does not neglect them, for the interest of OPEC is the sum of all its members and is not limited to the interest of the largest producer only.
Even at the meeting of the twentieth members on the tenth of April and taking the decision to reduce, Iraq’s share of the reduction was about one million barrels per day in the next two months and 850 thousand barrels per day until the end of this year, and 650 thousand barrels per day until April 2021, and Iraq’s objection to changing oil levels The reference for both Saudi Arabia and Russia is in place and contributed to its reduction in part, but he did not object, even with a whisper, as he was the first victim of the two decisions on the way to manage the crisis and its outcome.
The whole world is aware of the financial and economic conditions and deficits that Iraq suffers, and that its budgets depend mainly on oil revenues. Reducing an average of 750 thousand barrels per day of production for a period of two years will affect its revenues, especially as it will affect our oil fields in the first place and I doubt that the damage will extend to the fields of the region. A quarter of a billion dollars over the reduction period. The commitment of Iraq to the decision to reduce over a period of two years (the proposed period of reduction) will result in losing about two months of production in full by calculating the current production rates. It is true that the reduction mechanism may succeed in reducing the surplus in the market and improving prices, but why Iraq does not bear the greatest part of the loss and ignores its claim for compensation.
Interested people raise many questions about the feasibility of Iraq remaining in OPEC in light of the dominance of the policies of the largest producer, which makes it blow to the wind, as OPEC is a locomotive carrying twelve passengers who are supposed to have a clear road map and its path is agreed upon and its mission is to preserve the safety of the locomotive and its passengers, but if he wants The driver of the carriage to direct her and her passengers to convert to another railroad in an effort that he believes is appropriate, but it is not necessarily valid for the rest of the members unless it was agreed upon in advance, which represents a transgression against Iraq as the second producer in the organization to participate in the decision, and in this behavior the Saudi It has abandoned its role in defending the interests of the members combined. It has become clear that OPEC is no longer able to restore its capacity in the oil market by the mechanisms followed, especially in recent years, and there is a conviction since 2014 and 2015 that there are other key players in the market that must be reached with them to maintain the share and the attractive prices, including Russia.
This interaction has contributed to maintaining the balance of market fundamentals beyond facing conflict with increasing unconventional oil production in the United States. Producers in the US states invested two major issues in maximizing shale oil production, which faced a setback in its decline in production rates in 2014-2016, bringing production to minimum levels of about 8.5 million per day.
Here are two important issues that should be mentioned first: The Russian-Saudi understanding encouraged an increase in shale oil production in the United States, achieving in the middle of 2018 similar production to Russia and Saudi Arabia (about 10.5 million per day), and continued to exceed the production of both competitors squaring at the top of the producers in the world Until March 2020, with a difference of more than two million barrels per day. The second issue was the success of the United States in the same period of incentivizing investors when it lifted the ban on the export of crude oil and American oil derivatives since 2017. Thus, the United States has been able to increase its investments in shale oil and to top the global oil production to touch its production 13 million barrels per day After its rates were less than 6 million barrels per day in 2008. In addition, it has been competing with other countries for their oil exports to reach about 4 million barrels per day. It was expected before the outbreak of the Corona pandemic and with the assumption that the Saudi-Russian policy will continue to be committed to reducing the increase in shale oil production at the same rates to reach in the year 2023 to the level of 18 million barrels per day. Therefore, Russian policy in light of the economic repercussions of the Corona virus, low demand for oil, especially from East Asian countries and high levels of storage, resorted to expressing its opposition to the Saudi proposal to continue the same approach and allow the United States to invest in the market at the expense of reducing production by OPEC +. Russia was ready to face the repercussions of the Saudi and American reactions. Therefore, Russian policy in light of the economic repercussions of the Corona virus, low demand for oil, especially from East Asian countries and high levels of storage, resorted to expressing its opposition to the Saudi proposal to continue the same approach and allow the United States to invest in the market at the expense of reducing production by OPEC +. Russia was ready to face the repercussions of the Saudi and American reactions. Therefore, Russian policy in light of the economic repercussions of the Corona virus, low demand for oil, especially from East Asian countries and high levels of storage, resorted to expressing its opposition to the Saudi proposal to continue the same approach and allow the United States to invest in the market at the expense of reducing production by OPEC +. Russia was ready to face the repercussions of the Saudi and American reactions.
Oil alliances after the Corona crisis
The features of the oil market in the post-Corona world will be totally different from what it was before that, and the United States cannot invest in reducing OPEC + production without that affecting the producers in America, Canada and the rest of the countries, there are three main players in the oil scene, two of them agree to limit Investment opportunities in unconventional oil to maintain their market shares, and the other sees that shale oil is the lever for the American economy and the domination of the oil market. The Russian rejection of the Saudi proposal in March 2020 led to the destabilization of oil investments in the United States, so the number of rigs in the United States decreased due to the collapse of prices, and these repercussions will remain for a period of not less than a year or more before investments resume again their activities to increase production of shale oil to launch the wave The third in 2021.
1- At the international level: Formulating a new framework that brings together all the countries producing conventional and unconventional oil, and it becomes an internal system that guarantees the interests of its members and without harming the consuming countries.
2- Within the framework of OPEC: The current crises revealed that the organization is no longer able to control the oil market, forcing it to reach an understanding with Russia and its allies on production ceilings to maintain prices. Therefore, member states should review the organization’s performance, especially as we are on the cusp of celebrating its 60th birthday to discuss the feasibility of staying this. The framework in its current form to achieve the interests of members, especially the domination of its major producers by its policies, and we must evaluate the step taken by the State of Qatar last year, where it announced its withdrawal from OPEC and that it does not see in this framework a way to guarantee its interests.
3 - As for Iraq: Despite increasing its oil production to rates that made it the second product in the organization and the fifth in the world, the Iraqi government was unable to develop a clear oil policy, not at the national level or at the level of OPEC or international forums, but the formulation of this policy remained phased and captive of the jurisprudence and this What harms the interest of Iraq and its economy. Iraq has lacked the initiatives that would push it to play a new role commensurate with the political and social changes that have occurred in the region, while not neglecting the existence of attempts by some influential member states in the organization to prevent Iraq from being given a role in shaping its policies. In return, Iraq has failed to brandish a reaction, no matter how large, against such attempts.
The time has come for Iraq to lay down a mature vision of oil policy capable of preserving the country's interests and toward formulating new alliances that will make its decisions guarantor for the benefit of its members and work to stabilize the market.
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{Dr. Ibrahim Bahr Al-Uloom} Mexico yesterday objected to the OPEC + decision to reduce 400 thousand barrels per day (b / d) of its estimated production of 1750 thousand b / d in the first stage, and expressed its initial approval of 100 thousand b / d, and kept the world tight to efforts Leaders in order to persuade her to accept the reduction rate. Forcing the American President to speak directly with his Mexican counterpart to persuade him to cooperate with the producing countries to pass the resolution promising compensation, and Mexico remains committed to determining its percentage of the reduction in proportion to its economic reality.
The strange thing is that Iraq is the worst victim in my decisions of the ninth of March and the tenth of April. The Saudi decision on the ninth of last March was an impromptu unilateral decision that affected the economies of all producing countries, where oil lost nearly 23% of its price, and this sharp decline in prices is the second of its kind in three decades, where the markets witnessed a decline greater than last month and about 32% It was precisely on January 17, 1991 when the international coalition launched the war against Iraq because of its invasion of Kuwait, so Iraq’s oil exports stopped until the implementation of the oil-for-lunch program in 1996, and some of the OPEC neighbors acquired Iraq’s share in the market.
Despite the damage suffered by Iraq last month due to the Saudi decision, the Iraqi voice participating in the meetings of the ninth of last March was absent from clarifying its position as a country occupying the second position in production, it was expected that Iraq would have a clear vision of what happened, whether negatively or positively, and be bold to direct Direct or indirect criticism to Saudi Arabia because of its decision taken without returning to OPEC members, which caused a collapse in the market, and Saudi Arabia acted as if it was the custodian of (minors)! With the rest of the organization.
Iraq should have claimed compensation for the loss caused to it by this hasty decision that neglected the interests of other OPEC countries and caused Iraq to lose half of its oil revenues. OPEC is a solidarity organization working to guarantee the interests of its members, and its decisions are supposed to be unanimous. As for Saudi Arabia being alone in the decision without at least understanding with Iraq as the second and most affected product, it is not justified. For Saudi Arabia to lead the OPEC as the largest producer, and its production constitutes 40% of the total production of its countries is acceptable provided that it maintains the interests of the OPEC countries and does not neglect them, for the interest of OPEC is the sum of all its members and is not limited to the interest of the largest producer only.
Even at the meeting of the twentieth members on the tenth of April and taking the decision to reduce, Iraq’s share of the reduction was about one million barrels per day in the next two months and 850 thousand barrels per day until the end of this year, and 650 thousand barrels per day until April 2021, and Iraq’s objection to changing oil levels The reference for both Saudi Arabia and Russia is in place and contributed to its reduction in part, but he did not object, even with a whisper, as he was the first victim of the two decisions on the way to manage the crisis and its outcome.
The whole world is aware of the financial and economic conditions and deficits that Iraq suffers, and that its budgets depend mainly on oil revenues. Reducing an average of 750 thousand barrels per day of production for a period of two years will affect its revenues, especially as it will affect our oil fields in the first place and I doubt that the damage will extend to the fields of the region. A quarter of a billion dollars over the reduction period. The commitment of Iraq to the decision to reduce over a period of two years (the proposed period of reduction) will result in losing about two months of production in full by calculating the current production rates. It is true that the reduction mechanism may succeed in reducing the surplus in the market and improving prices, but why Iraq does not bear the greatest part of the loss and ignores its claim for compensation.
Interested people raise many questions about the feasibility of Iraq remaining in OPEC in light of the dominance of the policies of the largest producer, which makes it blow to the wind, as OPEC is a locomotive carrying twelve passengers who are supposed to have a clear road map and its path is agreed upon and its mission is to preserve the safety of the locomotive and its passengers, but if he wants The driver of the carriage to direct her and her passengers to convert to another railroad in an effort that he believes is appropriate, but it is not necessarily valid for the rest of the members unless it was agreed upon in advance, which represents a transgression against Iraq as the second producer in the organization to participate in the decision, and in this behavior the Saudi It has abandoned its role in defending the interests of the members combined. It has become clear that OPEC is no longer able to restore its capacity in the oil market by the mechanisms followed, especially in recent years, and there is a conviction since 2014 and 2015 that there are other key players in the market that must be reached with them to maintain the share and the attractive prices, including Russia.
This interaction has contributed to maintaining the balance of market fundamentals beyond facing conflict with increasing unconventional oil production in the United States. Producers in the US states invested two major issues in maximizing shale oil production, which faced a setback in its decline in production rates in 2014-2016, bringing production to minimum levels of about 8.5 million per day.
Here are two important issues that should be mentioned first: The Russian-Saudi understanding encouraged an increase in shale oil production in the United States, achieving in the middle of 2018 similar production to Russia and Saudi Arabia (about 10.5 million per day), and continued to exceed the production of both competitors squaring at the top of the producers in the world Until March 2020, with a difference of more than two million barrels per day. The second issue was the success of the United States in the same period of incentivizing investors when it lifted the ban on the export of crude oil and American oil derivatives since 2017. Thus, the United States has been able to increase its investments in shale oil and to top the global oil production to touch its production 13 million barrels per day After its rates were less than 6 million barrels per day in 2008. In addition, it has been competing with other countries for their oil exports to reach about 4 million barrels per day. It was expected before the outbreak of the Corona pandemic and with the assumption that the Saudi-Russian policy will continue to be committed to reducing the increase in shale oil production at the same rates to reach in the year 2023 to the level of 18 million barrels per day. Therefore, Russian policy in light of the economic repercussions of the Corona virus, low demand for oil, especially from East Asian countries and high levels of storage, resorted to expressing its opposition to the Saudi proposal to continue the same approach and allow the United States to invest in the market at the expense of reducing production by OPEC +. Russia was ready to face the repercussions of the Saudi and American reactions. Therefore, Russian policy in light of the economic repercussions of the Corona virus, low demand for oil, especially from East Asian countries and high levels of storage, resorted to expressing its opposition to the Saudi proposal to continue the same approach and allow the United States to invest in the market at the expense of reducing production by OPEC +. Russia was ready to face the repercussions of the Saudi and American reactions. Therefore, Russian policy in light of the economic repercussions of the Corona virus, low demand for oil, especially from East Asian countries and high levels of storage, resorted to expressing its opposition to the Saudi proposal to continue the same approach and allow the United States to invest in the market at the expense of reducing production by OPEC +. Russia was ready to face the repercussions of the Saudi and American reactions.
Oil alliances after the Corona crisis
The features of the oil market in the post-Corona world will be totally different from what it was before that, and the United States cannot invest in reducing OPEC + production without that affecting the producers in America, Canada and the rest of the countries, there are three main players in the oil scene, two of them agree to limit Investment opportunities in unconventional oil to maintain their market shares, and the other sees that shale oil is the lever for the American economy and the domination of the oil market. The Russian rejection of the Saudi proposal in March 2020 led to the destabilization of oil investments in the United States, so the number of rigs in the United States decreased due to the collapse of prices, and these repercussions will remain for a period of not less than a year or more before investments resume again their activities to increase production of shale oil to launch the wave The third in 2021.
1- At the international level: Formulating a new framework that brings together all the countries producing conventional and unconventional oil, and it becomes an internal system that guarantees the interests of its members and without harming the consuming countries.
2- Within the framework of OPEC: The current crises revealed that the organization is no longer able to control the oil market, forcing it to reach an understanding with Russia and its allies on production ceilings to maintain prices. Therefore, member states should review the organization’s performance, especially as we are on the cusp of celebrating its 60th birthday to discuss the feasibility of staying this. The framework in its current form to achieve the interests of members, especially the domination of its major producers by its policies, and we must evaluate the step taken by the State of Qatar last year, where it announced its withdrawal from OPEC and that it does not see in this framework a way to guarantee its interests.
3 - As for Iraq: Despite increasing its oil production to rates that made it the second product in the organization and the fifth in the world, the Iraqi government was unable to develop a clear oil policy, not at the national level or at the level of OPEC or international forums, but the formulation of this policy remained phased and captive of the jurisprudence and this What harms the interest of Iraq and its economy. Iraq has lacked the initiatives that would push it to play a new role commensurate with the political and social changes that have occurred in the region, while not neglecting the existence of attempts by some influential member states in the organization to prevent Iraq from being given a role in shaping its policies. In return, Iraq has failed to brandish a reaction, no matter how large, against such attempts.
The time has come for Iraq to lay down a mature vision of oil policy capable of preserving the country's interests and toward formulating new alliances that will make its decisions guarantor for the benefit of its members and work to stabilize the market.
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