The end of OPEC seems inevitable .. Are we witnessing an oil agreement between Saudi Arabia and America?

Polish philosopher and writer Zygmont Booman has repeatedly warned that all measures taken in the name of saving the economy are turning into measures that enrich the rich and impoverish the poor.

In this regard, the writer Anna Rodriguez said in a report in the Spanish newspaper "Atelier", that Bouman's philosophy was confirmed in early March, when world oil prices collapsed, against the background of opening a new wound between two of the largest oil producers in the world - Russia Saudi Arabia - on how to respond to the potential impacts of an outbreak of coronavirus.

The wounds that have not yet healed can have severe consequences, just as they did just a few weeks ago, when the distance between these two countries pushed the world economy to the brink, according to the author.

The beginning of the price war
This crisis began to appear since the current March 6. On that day, a meeting was held between the Organization of Petroleum Exporting Countries (OPEC) and ten other countries producing it (OPEC Plus).

At that meeting, the potential impact of the Corona virus (Covid-19) on this industry was analyzed, and Saudi Arabia failed to persuade Russia to implement a series of production cuts to offset the drop in demand.

For its part, Riyadh did not take a few hours to respond, and it did so by lowering oil prices to unexpected levels, hence the price war.

In a series of interviews with several experts from the Atlantic Council on oil and the way ahead in the industry, Director of the World Energy Center of the Atlantic Council Randolph Bell said that this conflict is understood as a geopolitical confrontation that strengthens the position of the United States in the oil market.

Randolph Bell warned that "the global oil price drop caused by the Corona virus laid the basis for the collapse of the OPEC Plus agreement," however - in his opinion - the impact of the virus was just one of many events that caused the outbreak of this price war.

The relationship of Russia and Saudi Arabia
The author added that Randolph Bell considered that Russia had not responded to the OPEC plan to "punish" American oil shale producers in retaliation for the sanctions imposed on this country, whether in the Nord Stream 2 pipeline or in Rosneft for their work in Venezuela.

Randolph Bell said that the relationship between Russia and Saudi Arabia, along with the freedom of the United States to impose energy sanctions, is a direct result of production growth in the United States.

For his part, sees the director of the Eurasia Center of the Atlantic Council, John Herbst, that Moscow's decision not to do what OPEC agreed to is based on purely economic reasons.

Herbest explained that the Russian economy has been in recession since 2013, long before the sanctions and when the price of a barrel of oil was still above $ 100.

After GDP fell in 2015, growth was weak, and John Herbst believes that American ingenuity in developing shale production has placed it in an enviable position, regardless of what happens in the oil market.

However, Herbst believes that Saudi Arabia, as an OPEC producer, has a long history of implementing production cuts when global oil demand is weak, to support prices, as long as its partners are also ready to limit production.

In light of this situation, there are two noteworthy trends: the first is toward the "end" of Russian-Saudi relations after the collapse of this oil alliance, while the second focuses on what the price war means to the American giant.

Global oil decline
As such, Blackmore sees that the big winner in this war will be China, as the possibility of the United States being further dispersed by the Corona virus crisis in the areas of trade and foreign policy could be good geopolitical news for Beijing.

As for the non-resident member of the Atlantic Council's World Energy Center, Ellen Wald, she said, "It appears that the alliance between Russia and OPEC has largely collapsed."

Unlike Blackmore, Ellen Wald believes that Russia will win this conflict, noting that Russian Energy Minister Alexander Novak and Russian President Vladimir Putin have experience and seriousness, and they have no reason to surrender, while Saudi Arabia and OPEC appear to want to cut production.

The author indicated that the treasures of the Saudi government, which relies heavily on the oil industry, may be affected by the drop in oil prices in the event of a prolonged Corona virus crisis.

The most disturbing researcher Ellen Wald is that "20% of the investors in Aramco are Saudis, as well as the company's shares have declined as a result of this news," which could affect the country's development.

The writer quoted analyst Anders Aslund, a prominent member of the Atlantic Council, that the current decline in global oil prices will be deeper than in 2016, and more similar to the situation in 2008. Also, the economic crisis caused by the Corona virus pandemic, can push the world to Request less oil for a period of time.

Aslund added that the impact on the Russian economy is likely to be severe and permanent. In 2008, when the price of oil fell to about $ 32 a barrel, the Russian stock market fell by 80% over half a year and did not recover from that blow.

Possible oil agreement
The author warned that there is an agreement that can change everything and its consequences may be severe. In recent days, rumors have begun to emerge about a possible agreement between Washington and Riyadh.

This alliance will make both countries - the largest producer and largest oil exporter in the world - acquire more than 40% of the oil market, an alliance that would allow them to gain significant influence when it comes to setting prices.

A week ago, the US President said he was ready to intervene to reduce tensions between Moscow and Riyadh, and Kremlin spokesman Dmitry Peskov said: "We are aware of the ordeals of the massive oil sector in the United States because of these prices."

Dmitry Peskov also objected to Donald Trump's willingness to interfere in Russian-Saudi relations, noting that his relations with Saudi Arabia are good, saying, "No one should interfere in these relations."

As China has become more prominent in the region, the price war between Riyadh and Moscow highlights differences of cooperation between Vladimir Putin and Saudi Crown Prince Muhammad bin Salman.

With the drop in oil prices amid a global economic crisis, the United States has more freedom to act on the geopolitical level, but will we witness an inevitable loss of OPEC importance in the coming months?