The Organization of Petroleum Exporting Countries (OPEC) - which has been in existence for 60 years - is going through one of the worst storms it has witnessed throughout its existence with the decline in oil demand due to the Coronavirus (Covid-19) and the transition to clean energy, despite the erosion of its monopoly and the intensification Disagreement in its ranks, but experts believe that its role is not over yet.

"The cartel's future prospects have never been so unfavorable," says Philip Sibel-Lopez, an independent analyst and director of Geopolia Consulting.

"Some people go as far as saying that OPEC is an outdated organization. I don't believe it," said Carlo Alberto de Casa, an analyst at ActivTrades. "It is definitely less influential than it has been in the past, but it still represents weight." Heavy ".

The alliance was founded on September 14, 1960 at the initiative of Saudi Arabia, Iran, Iraq, Kuwait and Venezuela, and now includes 13 members, in addition to 10 other countries, if we take into account the signatories to the OPEC Plus agreement, including Russia.

All of these countries represent half of the global production of black gold.

Correcting conditions

Last March, faced with declining prices as the epidemic spread outside China, the cartel and its allies failed to agree on what to do.

The lack of coordination led to a historic drop in prices, with the price of a barrel in New York falling into negative territory at the end of April.

Then the "OPEC Plus" group corrected the situation by cutting up to 20% of its production, and this allowed prices to rise to about $ 40 a barrel now.

This joint work showed that the group still plays a leading role in the market "the United States cannot play, since its oil companies are private," according to Lopez.

But at the same time, this policy strengthened the status of Americans as the first producer in the world as of the end of 2018, and dried up the financial resources of the members of the bloc.

From here arises the difficulty of ensuring that everyone respects the specific quota after reducing production, a task nonetheless necessary to ensure the cartel's credibility, as Saudi Energy Minister Abdulaziz bin Salman reiterates, and the finger in non-compliance with quotas is pointed at Nigeria and Iraq repeatedly.

OPEC Plus countries account for half of global oil production (Getty Images)

Consumption peak

In response to the COVID-19 pandemic, closures and travel restrictions have reduced oil consumption.

Some expect it will never return to last year's level.

According to its scenario, which is in line with the Paris climate agreement with the aim of keeping warming well below two degrees Celsius or even 1.5 degrees, the International Energy Agency believes that oil demand will begin to decline in the next few years, around 2022.

Paula Rodriguez-Masio, an analyst at Rystad Energy, says that this announced decline "does not mean that we will go from tomorrow to zero consumption," noting that at the height of the crisis, the world continued to consume more than 70 million barrels per day, instead of 100 million before. The epidemic.

De Casa goes back to saying, "Even if demand peaks, oil is very likely to remain a pivotal energy source over the next 20 years."

Total CEO Patrick Pouyanné announced last June that production would reach 50 million barrels per day by 2040-2050.

Great precautions

In its 60th year, OPEC is thus far from losing its role.

The low cost of producing its barrels to "about $ 10", says the analyst at Rystad Energy - as is the case with Saudi Arabia, which is extracting oil from the ground - makes the organization resilient.

And she adds, "extracting oil in Saudi Arabia is much less expensive in terms of carbon dioxide emissions compared to the technique of fracking water" widely used in the United States, and has been criticized for the damage it causes to the environment.

The members of the cartel have the largest crude oil reserves in the world, with Venezuela, Saudi Arabia, Iran and Iraq occupying four of the top five in terms of global reserves, according to the US Energy Information Agency.

Their market share will benefit from the imminent return to Libya, pending the return of Venezuela and Iran, which remain subject to US sanctions.