Abstract:

Petroleum is a political commodity. Paradoxically, OPEC, which was established to deal with such a commodity, is held together by common economic interests relating to oil prices and revenues. Yet politics inevitably plays a role. It can delay the reaching of agreements between member countries. On the sharing of the rent between governments of producing and importing countries, producers have turned out to be the weaker parties. The oilexporters’ dependence for political survival on oil revenues turns out to be a determinant of price movements. Today, even the rich OPEC countries feel financially vulnerable, and this common feeling is the new cement which enhances their cohesion. However, OPEC will only be able to hold the line during the coming recession if the fall in world oil demand is small.

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