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Once an American foe, now a friend: OPEC turns 60

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15.09.2020

ARTICLE: In 1973, Arab members of the Organization of Petroleum Exporting Countries brought the US economy to its knees. Now, the cartel created 60 years ago is more likely to do Washington's bidding.

Since Saudi Arabia and other Arab OPEC members imposed their famous oil embargo as retribution for US support for Israel during the Yom Kippur War, shifts in global politics and a surge in America's oil production have tamed the group.

OPEC's most hawkish members, Iran and Venezuela, have been sidelined by US sanctions while its kingpin, Saudi Arabia, has shown it would rather appease Washington than risk losing US support, current and former OPEC officials say.

While OPEC as a bloc resisted US pressure to lower oil prices for decades, notably in 2011 during the uprising against Libya's Muammar Qaddafi, its record over the past three years has largely been one of capitulation, these officials say.

Founded in Baghdad on Sept. 14, 1960 to counter the power of seven US and British oil companies, OPEC has repeatedly yielded to pressure from Washington to pump more oil since US President Donald Trump took office at the start of 2017.

Trump has regularly called for lower gasoline prices to help US consumers.

And when prices got too low for US drilling companies to make money this year, OPEC hashed out a deal to bring them back up slightly, in an agreement spurred on by Washington's threat to reduce its military backing for Riyadh, sources have told Reuters. https://reut.rs/3m4gBSr

"Trump orders from Saudi Arabia what he needs for the oil price - and he is served," Chakib Khelil, who was Algeria's oil minister for a decade and OPEC's president in 2001 and 2008, told Reuters. "So indeed OPEC has changed."

The Saudi Energy Ministry declined to comment.

The White House declined to comment.

Reuters spoke to eight current and former OPEC officials, representing over a third of the group's output, as well as analysts, traders and investors to ask how US sanctions on Iran and Venezuela had affected Saudi Arabia's influence within OPEC, and whether that had changed the dynamic with........

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