In September, the Organization of the Petroleum Exporting Countries (OPEC) turned 60—an anniversary that comes at a critical moment in its history. While its power over oil prices has waxed and waned throughout its life, never before the COVID-19 pandemic was its very existence put into question. After initial hesitation and major miscalculations, since April, OPEC has reluctantly played the role of market stabilizer to rescue an oil industry that was close to collapse. Now peering down the barrel of peak demand and a much more competitive energy environment than in the past, OPEC should put aside its oligopolistic ambitions and aspire to serving mainly as ballast.
Over the past six decades, the oil market has evolved substantially on both the demand side and the supply side, forcing OPEC to adapt continuously, even when it looked obsolete. But, as Princeton professor Robert Keohane has argued, international institutions rarely die: “They are easier to maintain than to create.” And so, through three broad phases, OPEC persisted.
