Key Words: A price-fixing oil ‘cartel’? That’s not OPEC, says OPEC secretary-general

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‘OPEC is neither a cartel nor involved in the business of fixing oil prices. It would be a misjudgment to accuse us of such.’

Mohammed Barkindo

That “who, us?” moment came courtesy of Mohammed Barkindo, the secretary-general of the Organization of the Petroleum Exporting Countries, in an interview with Reuters on the sidelines of a Cairo energy forum on Monday.

It is likely to produce as much mirth as consternation in oil-consuming countries, particularly the U.S., where the now-14-member organization’s efforts to control output and prices has been blamed for bouts of economic turmoil. OPEC, formed in 1960, became a household name in the U.S. in 1973 as part of the Arab oil embargo that sent gasoline prices in the U.S. and other Western nations soaring.

And President Donald Trump has repeatedly taken aim at OPEC via Twitter, calling on the cartel to hold down oil prices.

Archive: A brief, wondrous history of OPEC landmark events

History has proven that OPEC isn’t all-powerful. Efforts to restrain supply over the decades have often been undercut by noncompliance, while an attempt to break U.S. shale producers by flooding the world with crude a few years ago came at a heavy fiscal and political cost that many members continue to pay. Just ask Venezuela’s Nicolás Maduro.

Recently, however, OPEC has had more success teaming up with Russia and other major producers in an attempt to clear up a global glut. Such a move in 2017 helped to end an oil-market rout that had taken crude below $30 a barrel. OPEC and its allies have started reducing output again this year in an effort to avoid a new glut — a move that’s been credited in part with a roughly 15% rebound by oil prices LCOJ9, -0.97% CLJ9, -0.62%  since the end of last year.

OPEC has long bristled at the cartel label. Indeed, Barkindo’s remarks were in response to a question about a bill passed by a U.S. House committee that would make OPEC subject to antitrust lawsuits. Currently, OPEC is immune to U.S. antitrust laws under what’s known as the act of state doctrine.

The Wall Street Journal in January reported that OPEC was debating whether to launch an aggressive public-influence campaign aimed at U.S. lawmakers and the White House to argue that the organization plays a vital role in helping the U.S. economy. In fact, the secretary-general has repeatedly in the past talked about his desire to strengthen the organization’s relationship with U.S. shale producers, who, of course, are subject to antitrust laws.

But as far as Barkindo is concerned, OPEC is just here to help.

“OPEC is an open, transparent organization focused on assisting the oil markets to remain in balance on a sustainable basis, which is a fundamental requirement of investors,” he said, according to Reuters.

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