Saudi think-tank looking at a world without Opec

Group’s spare capacity generates $200b annual benefits for world economy

ASaudi think-tank is studying what happens to oil markets in a world without Opec (Organisation of Petroleum Exporting Countries).

“We’re looking at what happens if there’s no spare capacity,” said Adam Sieminski, who heads up the King Abdullah Petroleum Studies and Research Centre in Riyadh. “One scenario to that is Opec doesn’t exist.”

The study is the second in a series, after an earlier report found that Opec’s spare capacity reduces oil price volatility and generates as much as $200 billion (Dh734 billion) of annual economic benefits for the world economy.

It comes at a critical time for Saudi Arabia, the de facto leader of Opec, given the widespread outrage over the killing of Saudi journalist Jamal Khashoggi last month. US President Donald Trump also has repeatedly attacked the oil group for keeping oil prices too high.

Sieminski, who previously served as the head of the US Energy Information Administration, said he couldn’t say whether the study reflects Saudi government thinking. He said the report was “internally generated” at the research centre.

“We’re looking at this because we think it’s important. I would be incredibly surprised if there aren’t 10 other analysts or institutions trying to understand the same question,” Sieminski said.

The centre is based in Riyadh as an independent notfor-profit think-tank. The Saudi government endowed the organisation 15 years ago, providing funding in perpetuity.