OPEC’s Days As Economic Power Are ‘Over’
Opec’s economic power is broken, says the unofficial historian of the oil industry, who has argued that the association of oil exporting countries has become irretrievably divided and is unable to reverse the current slump in crude prices.
Daniel Yergin, whose Pulitzer-prize winning book The Prize provides a comprehensive history of oil and power, said he believes the association’s economic prowess has been undone by its inability to agree on how to stop the oil crisis.
Mr Yergin said: “The era of Opec as a decisive force in the world economy is over. It is clearly a very divided organisation.”
Mr Yergin’s book, first published in 1990, dedicates several chapters to the rise and domination of Opec, the 13-member organisation that has caused sharp swings in the oil price by restricting or raising supplies since it was set up in 1960.
But the 69-year-old argues the current oil slump has exposed the organisation’s inability to act in a unified way.
Since its peak in summer 2014, the price of a barrel of crude has dropped from $115 to below $40, hurting oil companies and major exporting countries. Mr Yergin described this as the worst downturn he has seen in his career — equivalent only to the slump in the mid-1980s.