Dear MEL Topic Readers,
In five charts - How UAE's exit could affect Opec's influence over the
oil price
Formed in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, the
Organisation of the Petroleum Exporting Countries (OPEC) is an oil-exporting
cartel to coordinate oil policies. Until last month, there were 12 member
states and 11 other oil-producing countries, including Russia, that made up OPEC+
to exercise influence on the global oil market. For example, when the oil price
crashed during the coronavirus pandemic, OPEC+ cut production to raise prices. OPEC
was more influential 50 years ago when it produced over half of the global
crude oil, but last year its share dropped to 36.7% as the USA and Russia
increased their production. Suddenly, the UAE decided to depart from OPEC at
the end of last month. The emirates were the world's third biggest oil
exporter, only behind Saudi Arabia and Iraq, before the Strait of Hormuz, where
about one-fifth of the world’s oil supply travels through, was blocked by Iran.
After departing from OPEC, the UAE is expected to boost production substantially
without OPEC’s commitment. The block of the Hormuz Strait, declining OPEC’s
market share, and continuing Russia’s invasion of Ukraine. Oil supply and price
have become more fragile recently. Isn’t it time to accelerate the shift from
fossil fuels to renewable energies?
Read the article and learn about the declining influence of the international
oil cartel.
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