164th Meeting of OPEC: Shiite/Sunni split, Shale Oil and Russia

   

Today was held the 164th Annual Ministerial Meeting of the Organization of Petroleum Exporting Countries (OPEC) at Vienna, Austria, where it was finally agreed by consensus to keep production level at 30 millions barrels per day (mmbpd) in order to safeguard prices at 100$ a barrel, good enough for almost all of the members. So far so good. But the OPEC is haunted by geopolitical challlenges more than the known market fundamentals of supply and demand, which can be defined and translated into the broadening shiite/sunni split throughout the whole MENA (Middle East and North Africa) region conducted behind the curtains by Saudi Arabia and Iran, seen in different sectarian killings and clashes almost daily in Irak, Libya, Yemen, and so on with its epicenter in Syria. In that sense, the traditional homgeneity and monolitic sense within OPEC could be trashed away in the medium term. The only thing that could still keep them glued is the threat that can pose the ever-growing shale-oil based production in the United States (currently at 8 MMBPD), threatening the hegemony of the OPEC giving the appearance of ever more and more players in the world energy market.But even within the cartel members, instability reigns and fault lines are steep. Libya for example cant keep calm and a functional government amidst local militias and security personnel guarding oil facilities with considerable consequences to its overall production and exports. Saudi Arabia is under growing threats of its shiite and immigrant minority population presing the House of Al Saud for reforms and political as well as civil rights which aligned with neighbouring shiite population of Yemen is becoming a boiling point that could become the harshest hit to world oil market stability if saudi government is being shaked by massive protests and some sort of a civil unrest. So far this hasn´t happened but its another threat. And the one thing that could change the power play is Iran rapprochement with Washington after deal reached at Geneva on the nuclear issue which if its consolidated, definitely will be a game changer, given the long cuasi eternal Saudi US alliance as a shelter and cover against Iran under former president Ahmadinejad, now at critical point. Besides all this, some other players are appearing such as Kurdistan longing for more oil autonomy and giving away blocks to IOC´s in front of a dismaying Baghdad central government, that adamantly rejects any possibility of Kurdistan being self sufficient on oil, an euphemism of separatism.. And plus all this, there´s Russia trying to recover and regain a somewhat influence in the MENA and within the OPEC, although not without grievances with some members for example Saudi Arabia, its main competitor, and closing all this scenario there´s China, the newest player in the desert of the Gulf, now the sudden biggest winner of contracts of production, exploration in Irak, Saudi Arabia turning a great part of its exports to China, as well as Iran, Angola and Nigeria in the same case, highlighting the relevance of the People´s Republic of China in the OPEC geopolitics. So, no matter what the results and fanfare of today´s meeting at Austria before cameras, the challenges and threats ahead for the OPEC are much more than they were before, and one word sum them up: geopolitical risks.