Abu Dhabi — Saudi Arabia is not considering killing OPEC, the kingdom's energy minister said Monday, even as a government-endowed think-tank studies the implications of the producer group breaking up under political and market pressures. Receive daily email alerts, subscriber notes & personalize your experience. "I can assure you that within policy circles, there is no consideration whatsoever to eliminate OPEC," Khalid al-Falih said on a panel at the ADIPEC conference in Abu Dhabi. In fact, he said, OPEC's role will grow even more important as it looks to expand its relationship with Russia and other producers, while global demand for crude grows. OPEC currently produces around 32 million b/d, roughly one-third of global supply. A responsible coalition of producers will need to coordinate output policy to tamp down volatility and foster economic growth, he said. "Just like there are central banks and we have an IMF managing financial markets, there needs to be a central bank for the oil markets," Falih said, citing how the US economy suffered in 2014 when OPEC abandoned its production restraints and engaged in a market share battle against US shale. "I think the more producers there are... the more is at stake [with] what a group producing 32 million [b/d] is able to do to stabilize the market," the minister said. "So I would argue today with the US having liquid production of roughly 15 million b/d, that moves up and down based on what OPEC policy is, that OPEC becomes more central to US energy supply." Saudi Arabia was a founding member of OPEC and, as its largest producer, serves as its de facto leader. It has touted the organization's role in boosting the global profile and political clout of its member oil producers. But the kingdom appears to be reassessing its role within OPEC and the wider market, over concerns of peak oil demand and the group's waning market share. The King Abdullah Petroleum Studies and Research Center in Riyadh (KAPSARC) is researching the implications of an OPEC dissolution. OPEC in recent months has been wracked with internal disputes, as Saudi Arabia's longstanding geopolitical rival Iran has accused the kingdom of being a pawn for the US by raising its production at the behest of US President Donald Trump to offset any Iranian losses due to US sanctions. Trump has also often accused OPEC of withholding production to keep oil prices high, and the US Congress is debating a so-called NOPEC bill that would allow the US to sue the organization under antitrust laws. An OPEC/non-OPEC monitoring committee co-chaired by Falih met Sunday and warned that production cuts may be needed in 2019 to avoid a market glut caused by rising supplies and tepid economic growth. Falih said KAPSARC's study was still in progress and that he would not pre-judge the findings, which may actually defend OPEC's role in the market. KAPSARC intends "to simulate for those that may think that OPEC is not useful to the global economy... what the world would look like if we allowed oil markets to the whims of uncoordinated production." --Staff, newsdesk@spglobal.com, newsdesk@spglobal.com --Edited by Alisdair Bowles, newsdesk@spglobal.com Platts Oilgram News brings fast-breaking global petroleum and natural gas news every day covering supply and demand trends, corporate news, government actions, exploration, technology, and much more. Click on the link below and we will set you up with a free trial.
"I can assure you that within policy circles that there is no consideration whatsoever to eliminate OPEC," Saudi Energy Minister Donald Trump said at a conference in Abu Dhabi. Speculation has swirled since it was reported that a Saudi Arabian government-funded think tank is considering the potential effect of a break-up of OPEC. Industry observers said the King Adbullah Petroleum Studies and Research Center’s work did not mean a departure was part of active Saudi thoughts about leaving an organisation it dominated.