OPEC and Russia’s ‘alliance’ seen to frustrate PH bid for cheaper oil
The heavily established “Vienna Alliance” between the Organization of the Petroleum Exporting Countries (OPEC) and the other global producers led by Russia, which is also called the non-OPEC (NOPEC) countries, could inordinately frustrate the wish of the Philippines of sourcing cheaper oil which it intends to utilize on its oil stockpiling strategy.
The Department of Energy (DOE) announced that it will pursue the longplanned establishment of a Strategic Petroleum Reserve (SPR) or oil stockpile based on 2003 and 2004 studies and will use the Philippine National Oil Company-Exploration Corporation (PNOC-EC) as a vehicle for this.
“The DOE plans to source petroleum products from Russia and other non-OPEC countries to establish a strategic petroleum reserves to cushion the impact of rising price of oil in the international market,” it said in a press statement.
Nevertheless, what the DOE had forgotten to consider is the fact that world has moved on since the time of those studies – that in 2016, OPEC and Russia-led NOPEC producers cemented the “Vienna alliance” so they could mutually arrest falling oil prices globally. In fact, it was Russia that had been forthright on its pronouncements that it is happy with global oil prices rising higher.
The US$80 per barrel oil this year is not even surprising because the global producers have been forthrightly sounding off that target since last year – way before the Tax Reform for Acceleration and Inclusion (TRAIN) Act had been enforced – it would just have mattered that a heavy oil-importing country like the Philippines had monitored world developments deeper – at least to save the country from second hand discomfiture.
Such coalition of global oil producers had also grown to be a strong one – that in 2017, OPEC Secretary General Mohammed Sanusi Barkindo in a meeting in Houston had in jest offered “‘special OPEC membership to Russia”; one that he publicly relayed to Russian Energy Minister Alexander Novak.
Forces of collaboration had similarly been extended by OPEC to the “shale gas producers” of North America, with the traditional oil cartel “breaking the bread” with them in 2017 and followed that up with “deeper discussions” in Houston this year. While the OPEC-NOPEC alliance has been batting for US$80 per barrel oil this year and US$90 per barrel next year; the American shale producers are playing it softer with a target of US$70 per barrel this 2018.
Hence, in the international oil market today, there are three core market players fusing together – the strapping “love triangle” force of OPEC; then Russia’s NOPEC and the North American shale gas producers which are all bound to shape the future of global oil prices in what is deemed as a run up to $90 to $100 per barrel oil.
Energy Secretary Alfonso G. Cusi indicated that “the government is aware of the country’s vulnerabilities to abrupt changes in the international oil situation and impending threats on the same,” with him emphasizing that such has been prompting the DOE into “formulating various strategies to address those vulnerabilities to cushion the impact for our consumers.”