Internal differences are killing OPEC and its ability to influence the markets has all but evaporated, top Russian oil executive Igor Sechin told Reuters in some of his harshest remarks ever about the oil cartel.
Russia, which has been hit hard by the oil price collapse, was flirting with the idea of cooperating with OPEC in recent months until tensions between OPEC members Saudi Arabia and Iran ruined a global deal to freeze output.
Sechin – one of the closest allies of President Vladimir Putin – was the only Russian official to consistently oppose the deal with OPEC even after the Kremlin effectively endorsed the plan.
Now that his gloomy predictions about talking to OPEC have come to pass, Sechin feels vindicated and wants to help Russia avoid similar embarrassment in future.
“At the moment a number of objective factors exclude the possibility for any cartels to dictate their will to the market. … As for OPEC, it has practically stopped existing as a united organization.”
“The company (Rosneft) was skeptical from the very beginning about the possibility of reaching any sort of joint agreement with OPEC’s involvement in current conditions,” said Sechin, in comments over the weekend which were embargoed until Tuesday.
“Just to remind you, the only one question with which we responded to those who were interested to know our position: ‘Who should we agree with, and how?’ The development of the situation has clearly shown we were right.”
Sechin’s comments about the end of the era when OPEC could influence prices chime with those of Saudi Arabia’s newly appointed energy minister Khaled al-Falih.
Falih, who took over on Saturday from long-serving Ali al-Naimi, has been very vocal in the past year about his views that the oil market needs to rebalance through low prices and that the Saudis have the resources to wait.
Falih’s ultimate boss, Deputy Crown Prince Mohammed bin Salman, who oversees Saudi oil policies, has also signaled that the world is moving to a new era where supply and demand rather than OPEC will determine prices.
Sechin, who was born in 1960 – the same year as Falih – is also calling on Russia to abandon any hope that prices can be fixed by anything other than market rebalancing.
“At the moment, key factors which are influencing the market are finance, technology and regulation. We can see this with the example of shale oil which … became a powerful tool of influence on the global market,” Sechin said in the emailed comments.