Is End of OPEC Near- A Comparative Analysis

Shale, and now electric cars, are big disruptors

In the short term the market for their oil is being eroded by rising production outside their control. Oil demand itself is under threat from the electrification of road transport.

Flag of OPECCompetition

  • Rapid rise in US shale oil,
  • Brazil’s prolific sub-salt discoveries
  • Recent discoveries in north along the east coast of South America
  • An increasing volume of US crude now in Asia markets

Challenges for OPEC

  1. The group’s short-term worry is that any rise in crude prices above $50 a barrel will simply allow competing shale companies to hedge more of their future production and unleash another surge in output which will not fit OPEC budget.
  2. Oil is slowing in choice for fuel in transport and eventually its market share will come under increasing pressure. Four countries in Europe have now proposed bans on the sale of gasoline and diesel-fuelled cars by 2040 at the latest which counts for around a third of all the passenger vehicles in use in Europe.
  3. Rapidly falling battery costs will make electric vehicles as affordable as their gasoline or diesel rivals over the next 10 years.
  4. Oil lost its place in power generation after the price rises of the 1970s, and has seen its share of the global energy market slowly decline ever since.
About OPEC
OPEC, the Organization of the Petroleum Exporting Countries is an international organization. Since 1965, the headquarters of OPEC is in Vienna, Austria. OPEC was established in Baghdad, Iraq on 10–14 September 1960
Members – 14 countries
Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia ,The United Arab Emirates, Venezuela.
Indonesia was a former member.
Source Business line