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

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 & int’l 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.