Multiclausal Document Paves the Way Forward for Smooth Sailing
By Grace Cheong
\VIENNA: After lengthy discussion and debate, long-suffering countries have been able to make their desires for some solutions into a reality with the ratification of Resolution 1.1. Even though major players like Russia and Brazil were conspicuously absent from voting, it seems like the resolution sponsored by Saudi Arabia and its bloc was generally uncontested as various countries like Equatorial Guinea and Angola voiced out their support for the resolution which was deemed “extremely effective”, in line with most countries’ goals.
Broken down into three main articles about the stabilisation of global demand, the stabilisation of global supply and the diversification of the economy, various mechanisms were listed to tackle these worries, including the Triple SD Framework (Framework for Sourcing, Securing, and Stabilising Demand), OPEC MSR System (Market Supply Regulation System) and OPEC-IPTC Innovative Solutions Conference, or the OPEC-IPTC ISC for short. Another key facet is the sovereign wealth fund under Article 3 which aims to prioritise countries that need money for development most by using funds from oil producers’ and exporters’ revenue. Clearly, countries are starting to come together and recognise the need for greater cooperation as advocated early on by capstone member Saudi Arabia. The fruit of this was realised in various clauses which supported cooperation with other OPEC members and non-members, including smaller organisations at the state level. Under OPEC-IPTC ISC, collaboration with the International Petroleum Technology Conference (IPTC) seeks to encourage multilateral dialogue and cooperation between OPEC and OPEC+ members and stakeholders in order to promote best practices and innovation in the production of oil, protecting their profits.
This marks a step forward in the history of OPEC, possibly forced by the unpredictable pandemic, but its efficacy in the long run once again remains up to question as OPEC already faces difficulties in ensuring nations adhere to measures like quotas and production cuts. A commendable effort, this could very well support Riyadh’s wish to prevent a recurrence of the 2020 Saudi-Russia Price War by avoiding the translation of geopolitical feuds into oil market fluctuations, as fair geopolitical representation were present here.
The emphasis on market supply and demand however should also raise a warning in countries’ minds, to remember that oil reserves are not infinite and diversification should be the long term goal, even if Baghdad says that it should not be supported at this point in time since diversification competes with oil and could potentially harm its value even if that day is far in the future.
The committee is reminded of its commitment to protecting members’ profits even as most members have already ratified the Paris Climate Accord and is encouraged to continue working beyond existing measures, even those listed in the resolution, to seek long-lasting solutions and effective cooperation from both OPEC members and non-members alike.
References
Apparacio, Soila & Sauer, Natalie. (2020, August 13). Which countries have not ratified the Paris climate agreement? Climate Change News. https://www.climatechangenews.com/2020/08/13/countries-yet-ratify-paris-agreement/
Lee, Julian. (2021, February 7). Oil’s Recovery Is Too Fast for Its Own Good. Bloomberg https://www.bloomberg.com/opinion/articles/2021-02-07/crude-oil-price-recovery-is-too-fast-for-its-own-good
Soldatkin, Vladimir; El Gamal, Rania & Lawler, Alex. (2016, December 10). OPEC, non-OPEC agree first global oil pact since 2001. Reuters. https://www.reuters.com/article/us-opec-meeting-idUSKBN13Z0J8