- OPEC no longer has the influence it once did in the global oil market
- This is largely the result of the shale oil revolution in the United States
- Diverging interests among its members also plays a big role
- OPEC could regain its position if there were a severe supply shock
- More likely, the organization will continue to be marginalized
In the era of conventional oil, countries made decisions based on prices above $100 per barrel. The Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, essentially set the global oil price. Now, it is shale oil production in the United States that determines prices. Diverging geopolitical interests among OPEC’s members have eroded trust within the organization. This lack of trust makes it more difficult to enforce collective decisions that would be mutually beneficial. However, even if OPEC manages to freeze or cut production, the impact on the oil price will likely be limited, unless major non-OPEC producers such as Russia and the U.S. get on board. Moscow has voiced a willingness to join in such an action, but could renege at any time.