OPEC is no longer functioning as a cohesive group. Is it time for OPEC to finally dissolve?
The major oil-producing countries in the world heavily depend on the income from oil. A sharp drop in oil prices has rendered them vulnerable to terrorist attacks and political uprising. As members of the Organization of the Petroleum Exporting Countries (OPEC), these countries previously wielded power over oil prices and enjoyed the benefits of high oil prices.
Unfortunately, the oil cartel is no longer behaving like a cohesive group, and infighting among the member nations is doing more harm than good. Add to that the emergence of the shale oil drillers with their short production cycle that has rendered ineffective OPEC’s capability to influence prices.
OPEC member countries are now struggling to fund their own budgets in the wake of falling oil prices, and as a consequence, are no longer in a position to help each other financially. The geographical distance between the nations also makes any coordinated action more difficult.
Whenever OPEC group meets, Iran and Saudi Arabia are on opposing sides. One scuttles the proposal of the other and because of this, OPEC has been unable to pass any meaningful resolution during the past few meetings.
The combined effort of OPEC and Russia to freeze production has failed, with Saudi Arabia refusing to take part in any proposal that did not include Iran. The net result is that the countries no longer see any benefit from their OPEC membership..
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