Published in MarketWatch

“In my opinion, there’s nothing going on here, at least as far as oil markets are concerned,” said Omar Al-Ubaydli, a program director at the Bahrain Center for Strategic, International and Energy Studies.

He believes the “developments reflect geopolitics.”

“In the case of Saudi Arabia and Russia, both countries are seeking closer relations, and they want to project a good relationship to the rest of the world,” said Al-Ubaydli, who’s also an affiliated senior research fellow at the Mercatus Center at George Mason University. “They both know that there’s no chance of effective cooperation in oil markets due to market forces, but there’s no harm in having an extra meeting, and issuing mutually supportive statements.”

“In the case of Iran, their government officials are always happy to engage the media, especially now that sanctions have been lifted,” said Al-Ubaydli. “They like to make statements that suggest that their voice is important in global affairs, even though the reality of oil markets is that Iran and all other producers are slaves to market forces.”

هل ينبغي أن يكون اجتماع أوبك الـ 169، الذي انعقد في بداية شهر يونيو، آخر اجتماع للمنظمة؟ قال وينستون تشرشل، رئيس الوزراء البريطاني الأسبق: "للتحسين ينبغي التغيير؛ وللتفوق ينبغي دوام التغيير"، في الوقت الراهن، ربما يفضَّل لدول مجلس التعاون أن ترسم استراتيجيتها النفطية على أساس خليجي حصرياً، وبعيداً عن توترات وعرقلة أوبك.ـ

Published in Investor's Business Daily

Advances in drilling will help continue the success that U.S. companies have seen over the last five years, said Omar Al-Ubaydli, an affiliated senior research fellow at George Mason University's Mercatus Center.

New technology can also lead to more gradual moves in the price of oil, instead of wild swings, as shale is more nimble than conventional production, he added.

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Published in Investor's Business Daily

But OPEC is actually a “mission impossible,” and for the last 30 years has been perpetuating a myth that it has more power than it actually has, according to Omar Al-Ubaydli, an affiliated senior research fellow at George Mason University’s Mercatus Center.

And the advent of hydraulic fracturing and other new technologies have made producers more responsive to market conditions, with production able to climb in just months, if not weeks, he added.

“Saudi Arabia, the U.S. and Russia are the top three producers,” Al-Ubaydli told IBD. “Two of them are not in OPEC. It’s ridiculous to say you can make a cartel. The plan is dead on arrival.”

Some OPEC members tried to strike a conciliatory tone, with new Saudi Oil Minister Khalid Al-Falih calling the meeting “highly cooperative,” and Iranian counterpart Bijan Namdar Zanganeh saying there was “very good unity.”

When asked if that tone indicated an improved chance for cooperation later, Al-Ubaydli said that was all just posturing.

“The reality is, when you have a large number of geographically dispersed countries, it’s hard to enforce anything, even under ideal conditions,” he said.

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Published in Fox Business

Omar Al-Ubaydli, affiliated senior research fellow at George Mason University’s Mercatus Center, said the meeting’s outcome was 100% predictable and all the bluster about a growing rivalry between Iran, which earlier this year saw relief from international trade sanctions, and Saudi Arabia is a distraction.

The bottom line, he said, is there is no international cartel in any commodity – be it gold, copper, wheat, and even oil. Rather, he contends the swift swoon in oil prices in the summer of 2014 to the recovery crude has made so far this year, is a simple act of market forces.

”The market is bigger than any of these nations,” he said. “There is a large enough number of producers that no one nation is going to do anything to steer prices in one direction. Like any other commodity, there are ups and downs.” 

Al-Ubaydli said while it’s good publicity for OPEC nations to make it seem as though there were active policy negotiations, for the most part, it’s smoke and mirrors.

“Western countries were happy to let OPEC think it had power because they could blame [low prices] on any difficulties. OPEC likes to think it has power because they get to say we’re sticking it to the man, and holding the West by its throat…but ultimately it’s about politics in each country,” he said.

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