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Since the co-option of Russia at the end of 2016, OPEC has appeared resplendent, but it remains a far from perfect cartel with no real destination in sight.
Although it is acting robustly to rein in supply, which, in tandem with a brighter outlook for US-Chinese trade relations, have buoyed the oil price, its problems are just if not more acute today than at any time in the past.
OPEC has always struggled when there has been a surge in non-OPEC output, but this time round it is not just a new oil province that has opened up but a new category of oil reserve – Light Tight Oil, known more colloquially as shale oil.
However, since the last major challenge, the world has moved from fear of peak oil supply to peak oil demand. The supply of petroleum liquids is a function of price, rather than the gradual exhaustion of a finite resource, but demand cannot grow indefinitely unless the environmental costs can also be addressed.
This is a new paradigm for OPEC as it faces its largest non-OPEC volumetric challenge to date. It raises a question that reveals the organisation’s fundamental vulnerability – if it cannot grow in production terms while the oil market is expanding, how will it fare in a market that eventually starts to shrink?
Although not formally a member, Russia now looks like a permanent fixture within OPEC’s newly-broadened institutional architecture.