OPEC Is Holed Below the Waterline, It Just Doesn’t Know It Yet
Plans by Abu Dhabi to let its crude oil buyers resell on the open market are a threat to the cartel’s newfound cohesion.
Plans for Fujairah may blow a hole in OPEC.
Photographer: Karim Sahib/AFP via Getty Images
It doesn’t seem much, but the most damaging leaks often don’t. The Organization of Petroleum Exporting Countries has suffered a small crack that could grow to into a rift big enough to sink it.
No, I’m not talking about the bust-up between Saudi Arabia and arch-rival Iran, nor wrangling over Iraq’s repeated failure to abide by its output target under the current production deal. Rather, I’m referring to a decision by the United Arab Emirates, the group’s third biggest producer, to allow its crude to be traded freely on the open market by its initial buyer. That’s an initiative that veteran oil analyst Philip K. Verleger says eventually “could weaken OPEC and the [OPEC+] Coalition.”