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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