The Role of OPEC in Reducing Oil Prices under International Law: The 2014 Downfall and Today's Relevance

Author:Deymah Alweqyan
Position:Professor of International Law at Kuwait University Law School
Pages:97-119
SUMMARY

Fluctuation in the price of oil has been an international concern for decades, because oil is the primary export and main economic driver for many States. OPEC as an international organization is practicing its role in controlling oil prices and oil market under the rules and norms of international law. In 2014, the price of oil decreased tremendously in a way that shocked the international... (see full summary)

 
FREE EXCERPT
The Role of OPEC
in Reducing Oil Prices
under International Law:
The 2014 Downfall and
Today
s Relevance
Professor of International Law at Kuwait University Law School; Legal Advisor of Kuwait Oil Minister. LL.B./
LL.M. (Kuwait Univ.), Ph.D. (Penn State Univ.). ORCID: http://orcid.org/0000-0002-7300-9538. The author may be
contacted at: dr.dema.alwugyan@gmail.com/Address: Kuwait University, Shuwaikh, Jamal Abdulnasser road, Kuwait.
All the websites cited in this article were last visited on May 8, 2020.
Deymah Alweqyan
Fluctuation in the price of oil has been an international concern for decades, because
oil is the primary export and main economic driver for many States. OPEC as an
international organization is practicing its role in controlling oil prices and oil market
under the rules and norms of international law. In 2014, the price of oil decreased
tremendously in a way that shocked the international market. OPEC tried to stem the
losses and prevent prices from falling even further, and tried to facilitate international
law in the current crisis. World markets were further shocked when OPEC announced
that it would not cut production, and that the market would be supplied by the usual
average amount of oil exports. In contrast, WTO cut its global trade in an attempt to
shore up prices in the international markets, since low oil prices affected international
trade as well. In this article, I analyze the oil crisis that hit the world from 2014 to the
early year of 2016 period, and the role of international organizations such as OPEC
and WTO in facing international economic crises, as well as the role of international
politics to assure the implementation of law.
Keywords
OPEC, Oil Price, WTO, Kuwait, Saudi Arabia, Russia, United States
Over the years, the global oil and gas industry has gone through
many cycles and changes that have required the industry to adapt
J. East asia & intl l. Vol. 13/No.1 (2020); 97-120
Publication type : Research Article
Section : Article
DOI : http://dx.doi.org/10.14330/jeail.2020.13.1.05
98 Deymah Alweqyan
and evolve. There is no doubt that the last nine months [starting June
2014] has been one of those intermittent periods of volatility after
several years of stability.
Abdullah El-Badri, OPEC Secretary-General
1
I. Introduction
Fluctuation in the oil price has been an international concern for decades. Oil is the
primary export and main economic driver for many States, and thus oil prices can
determine whether the economy remains stable or is thrown into chaos. Oil has
experienced periods of particularly high prices in 1973, 1980, 1990, 2003, and 2009. In
contrast, oil declined in value, and prices fell down tremendously in 2014.
2
The breathtaking oil price decrease of 2014 shocked the global economy. The
Organization of Petroleum Exporting Countries (OPEC) sought to increase oil
prices because it would not only effect States but also upstream and downstream
oil companies. OPEC announced that it would not decrease production to preserve
streamlined movement for global oil markets with the assurance of a slow increase in
prices after a few months.
3
Moreover, Iran and Russia
4
accused Saudi Arabia of manipulating oil prices to
achieve a particular agenda. Indeed, Saudi might have sought to break the Russian-
Syrian-Iranian alliance as it strengthened due to the Syrian conict in 2012; thus, it
could have harmed their economies. However, Saudi Arabia might also have wanted
to prevent American shale producers from becoming competitors in the oil market.
Regardless, Saudi Arabia wanted to continue leading OPEC and dominating the
1 Speech by OPEC Secretary-General to the 19th Middle East Oil & Gas Conference, Ministerial Panel Session,
Manama, Bahrain (Mar. 8, 2015), available at http://www.opec.org/opec_web/en/2973.htm.
2 L. Kilian, Oil Price Volatility: Origins and Effects, WTO Report (2010), available at https://www.wto.org/english/res_
e/publications_e/wtr10_forum_e/wtr10_kilian_e.htm.
3 T. Hirst, OPEC Votes Not To Cut Production, Oil Prices Plummet, Bus. InsIde, Nov. 27, 2014, available at https://
www.businessinsider.com/opec-votes-not-to-cut-production-oil-prices-plummet-2014-11.
4 J. Dettmer, Iran Accused Saudi Arabia of Oil Conspiracy, VOA, Jan. 6, 2015, available at: https://www.voanews.
com/middle-east/iran-accuses-saudis-oil-conspiracy See also Saudi Arabia Manipulates Oil Price for Political Gains:
Russian Official, Press TV, Oct. 13, 2014, available at https://www.konfrontasi.com/content/english/saudi-arabia-
manipulates-oil-price-political-gains-russian-official; T. Hirts, Saudi Arabia’s Oil Price ‘Manipulation’ Could Sink the
Russian Economy, Bus. InsIde, Oct. 13, 2014, available at http://www.businessinsider.com.au/russia-saudi-arabia-and-
oil-prices-2014-10.

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