Claudia Luna Palencia
or as long as I can remember, OPEC has been screwing up the world’s life, to such an extent that countries like the United States have had to invest their ingenuity to turn from net oil importers into producers and even exporters, as has happened over the last fifty years.
A very important turning point was the boycott implemented by OPEC member countries in the 1970s, which drove hydrocarbon prices through the roof, much to the annoyance of many industrialised countries dependent on imports of this fossil fuel.
Oil has been used several times, at different times in recent history, as a kind of weapon of war, above all to put unusual pressure on economies that have no choice but to buy more and more expensive barrels of crude oil, with the consequent blow to the productive apparatus, to growth and, above all, to consumers’ pockets… in short, to inflation.
The consequences of the price hike policy agreed by the members of this cartel as an incendiary response to the Arab-Israeli conflict ended up plunging the industrialised and emerging economies into an ellipsis of stagflation and hyperinflation. Much of the pandemonium of the 1980s and 1990s can be traced back to OPEC’s damning manoeuvres.
This perverse game must come to an end one day because there is no end in sight now. Not as long as the producers and main exporters see in their power a potential and permanent weapon of blackmail, manipulation, and punishment in the face of a hot geopolitics that orbits around power.
In the end there is something political in the background. I have always believed that the fight for oil would unleash another great world war, I have seen Saddam Hussein fall and nothing happened; I have seen Muammar Gaddafi fall and nothing happened either and the same in the case of Hosni Mubarak… three countries that are fundamental in the oil industry, Iraq, Libya and Egypt.
Oil is the temptation, as if it were Adam and Eve’s apple. The United States and China, as well as India and Japan, know how important it is to sustain the expansion of their productive apparatus and to do so on the basis of cheap black gold.
Until a few hours ago, I thought that the mismatch between oil supply and demand was primarily affected by the pernicious effects of the pandemic, which has forced perimeter closures, customs controls, severe and intermittent confinements, in short, causing chaos in production and distribution.
I thought, as other analysts have argued, that it would take a matter of months for supply and demand to recalibrate as distribution channels returned to normal; but the US president’s decision to draw on his own accumulated reserves showed me that, at the heart of the mess, there is once again the political hand of OPEC – together with Russia – to make the road to recovery more difficult for the old acquaintances of old.
On the subject
Just read the signs: President Joe Biden orders the release of 50 million barrels accumulated in the so-called Strategic Petroleum Reserve (SPR) and other countries such as India, the UK, South Korea and China also follow suit.
All of them want to reduce the internal tension experienced by energy prices, which are rising and rising to the detriment of consumption, consumers, inflation and the recovery of GDP.
The reaction of the oil market to Biden’s announcement has been irrational and oil prices, instead of falling, have risen again: “Brent rose to over 82 dollars a barrel with a rise of 3.18% while West Texas rose by 2.57% to sell at 78.7 dollars”.
This illogic is once again underpinned by political and, above all, geopolitical interests: OPEC, together with Russia, wants to screw up the recovery… to make it difficult for everyone.
And when I say everyone, we must not forget that today’s world is more interlinked economically, commercially and technologically than ever before. Our reference to the 1970s and OPEC’s manoeuvres now takes place in a diametrically different context.
Today, OPEC can screw up our recovery if it does not give in to expanding oil supply in the coming months; indeed, they will have a meeting with Russia on 2 December. But they will also shoot themselves in the foot and end up buying inflation via international trade. No one is spared from this one….
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