The German Marshall Fund of the United States

  • Our Organization
    • About GMF
      The German Marshall Fund of the United States (GMF) strengthens transatlantic cooperation on regional, national, and global challenges and opportunities in the spirit of the Marshall Plan.

    Transatlantic Offices

    • Washington, DC
    • Ankara
    • Belgrade
    • Berlin
    • Brussels
    • Bucharest
    • Paris
    • Warsaw
    • Alliance for Securing Democracy
  • Our Work
    • Policy
      GMF provides effective ways forward to solving today’s transatlantic policy issues.
    • Leadership
      GMF programs offer rising leaders dynamic opportunities to hone their leadership skills.
    • Civil Society
      GMF supports civil society by fostering democratic initiatives, rule of law, and regional cooperation.
    • Research
      GMF publications examine the challenges facing the transatlantic region today and offer policy recommendations to address these challenges.
    • Perspectives
      Media, blogs, podcasts, video on the issues shaping the transatlantic relationship.
  • Our Events
    • Major Conferences & Forums
      GMF brings together hundreds of policymakers, elected officials, academics, and business leaders from around the world to discuss topics from energy to migration, economics to security, urban growth to diplomacy.
    • Recent & Upcoming Events
      GMF is committed to bringing the policy community together around transatlantic topics. Learn about events in its offices and other locations around the world.
  • Our Experts
  • Stay Informed
Search
Home
  • Our Experts
  • ABOUT US
  • FOUNDING CHAIRMAN
  • EXPERTS
  • LATEST RESEARCH
  • NEWS&EVENTS
  • PUBLICATIONS
  • SUPPORT CHARHAR

The Charhar Institute

  • About Us

    • About Us
    • Founding Chairman
    • Membership
    • Contact Us
    • Careers
    • Support Charhar
  • Regions

    • All Regions
    • America
    • Europe&Middle East
    • Asia
    • Africa&Latin America
    • Indo-Pacific
  • Topics

    • All Topics
    • Public Diplomacy and International Relations
    • Belt & Road Initiative
    • The Korean Peninsula
    • Economic and Trade
    • Communication
    • Law, Culture and Religion
    • Energy, Safety and Peace
  • Experts

  • Publications

    • All Publications
    • Public Dipmacy Quarterly
    • Other books and reports
    • Charhar Public Diplomacy series
    • Charhar Newsletter
    • Charhar International Relations series
    • Introduction to Public Diplomacy
  • News&Events

    • News&Events
    • Public Diplomacy
    • Peace Studies
    • Belt & Road
    • Charhar News
    • Announcement
    • For Media
Facebook Twitter YouTube Instagram LinkedIn
ForeignAffairs.com
  • ABOUT US
    • About Us
    • Contact Us
    • Careers
  • FOUNDING CHAIRMAN
  • EXPERTS
  • LATEST RESEARCH
  • NEWS&EVENTS
  • PUBLICATIONS
  • SUPPORT CHARHAR

NEWS&EVENTS

Facing challenges, US' IPEF may make the Asia-Pacific economy more...

June 09, 2022

Behind Biden’s Asia Trip

June 09, 2022

US sinks its claws back into Somalia with an eye on China and Russia

May 23, 2022

The Taiwan Question amid Russia-Ukraine Conflict

May 06, 2022

China’s Oil Deal v.s. the Dollar Mar 28, 2022

March 28, 2022

Biden’s Indo-Pacific Foray

February 26, 2022
More

Energy, Safety and Peace

Sudan's 'military-civilian co-governance' dies halfway

November 03, 2021

Human rights standards shall not be monopolized

October 14, 2021

Law, Culture and Religion

Israel's diplomatic breakthrough in Maghreb faces challenges

December 11, 2020

Meng ruling makes Ottawa new front line between Washington and Beijing

May 29, 2020

Communication

He Wenping: Fake news fails in damaging Sino-African ties

January 31, 2019

Resistance from within the White House

September 10, 2018

Economic and Trade

Challenges for the G20 in overcoming the pandemic

November 26, 2020

Liberalization and non-interference by government will clean up Pakistan'...

July 07, 2020

The Korean Peninsula

Su Hao: Tokyo should give ground to resolve tensions with Seoul over ‘comfo...

June 26, 2019

Swaran Singh: Can next U.S.-DPRK meeting be expected?

June 12, 2019

Belt & Road Initiative

China-Africa unity sees friendship of new era

January 05, 2021

Unchangeable Commitment

February 19, 2020

Public Diplomacy and International Relations

The key to peace between Russia and Ukraine CGTN

March 03, 2022

Biden’s first year marked by lows and challenges

March 03, 2022
More

Introduction to Public Diplomacy

Diplomatic Theory and Practice

June 21, 2018

Introduction to Public Diplomacy 2nd Edition

June 20, 2018

Charhar International Relations series

International Public Product: China and the World at the Midst of Revolut...

June 21, 2018

Power and Wealth: Economic Nationalism and International Relationships und...

June 21, 2018

Charhar Newsletter

Charhar Newsletter

August 16, 2018

Charhar Public Diplomacy series

Winning the Chinese Hearts and Souls

June 20, 2018

City Diplomacy: China’s Practice and Foreign Experience

June 20, 2018

Other books and reports

The impotence of conventional arms control

March 25, 2020

How Did Stalin Fall into the “Thucydides Trap”

February 27, 2020

Public Dipmacy Quarterly

Public Diplomacy Quarterly

August 17, 2018
More

How long could the current oil war continue?

February 18 ,2016

Cheaper oil [By Zhai Haijun/China.org.cn]



This is a most embarrassing moment for OPEC. The international crude oil price fell below US$26 per barrel last week. This stunning low oil price for all OPEC members is an unbearable difficulty since, in their lengthy oil war, crude oil prices have plunged to the record low for the past 13 years.

A Wall Street Journal report on Feb. 12 said that UAE Energy Minister Suhail al-Mazrouei had announced that, in reaction, OPEC was ready to reduce production and non-OPEC members should also cooperate by doing the same.

This promptly boosted the oil price. The WTI crude futures price for March surged 12.32 percent in the biggest single-day rise since 2009 to close at US$29.44 per barrel. Meanwhile, Brent oil futures for April jumped 10.98 percent to close at US$33.36.

This was not OPEC's first bid to reduce output, although previous ones proved futile. The likely winners this time, however, are the non-OPEC countries and the shale oil industry of the United States, terminating OPEC's longstanding upper hand in the oil market. At the same time, non-OPEC countries are losing patience over this lengthy contention.

The UAE's reason for proposing a "truce" is simple: either everyone reduces output simultaneously or they carry on with the war to the bitter end.

Indeed, OPEC may have miscalculated. In persisting with high production, Middle East countries, as OPEC's core members, are suffering from the resultant low prices. In 2015, Saudi Arabia reported a deficit of a staggering hundred billion dollar scale. Venezuela, meanwhile, is on the brink of bankruptcy.

Iran's reluctance to cooperate is another reason for this internal strife, although it did have a legitimate reason. After the Iran nuclear issue was solved, the Persian Gulf country naturally sought to release the years of pressure from international trade sanctions, so, even at a low price, more exports could still be positive news.

Similarly, OPEC did not expect to see such a strong reaction from Russia, a country stuck in two geopolitical crises - Ukraine and Syria. The United States, although it suspended its shale oil production, seemed unaffected either, as it even lifted a 40-year ban on oil exports.

So far, however, this oil war is nothing compared with the one in the last century when OPEC was able to call the shots worldwide. The current struggle is a contention between old deposits and new technologies, and one between oil exporting countries and industrial powers.

For Saudi Arabia and its peers, an oil war against the United States just means to invite defeat, while one against Russia likely won't bring about success, and one against the other non-OPEC countries will end in a loss for all sides.

OPEC's reluctance to cut its output has largely been blamed on Saudi Arabian obstinacy. The UAE energy minister's remark reflected internal struggles that, in a worst case scenario, could see OPEC fall apart.

In fact, even if the oil war ends immediately, and all oil exporting countries announce reductions in output, the global oil prices won't recover that much; there is no way that the price could return to above US$100 per barrel.

First, shale oil exploration increases the supply in the international market, apart from ending the OPEC's monopoly. Second, the excessively low prices amount to a serious warning to OPEC in that being entirely dependent on oil exports not only leads to financial crisis but can threaten national security; on the good side, this trend will facilitate Gulf countries' industrial optimization.

Third, the oil war has increased many countries' oil reserves by pumping excessive supply into the international market. Hence, despite reduction in output, to accommodate the existing surplus will take some time. And fourth, in the still-gloomy international market in which major commodities all suffer from low prices, crude oil is not an exception.

In the larger picture, ecological civilization starts to take hold globally, leading to international treaties on emission reduction. Clean energies will soon become the market mainstream, replacing non-renewable crude oil to fuel global growth.

Zhang Jingwei a researcher of the Charhar Institute.

This article was first published in Chinese and translated by Chen Boyuan.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

Stay Informed

Don't miss our latest dynamic. Sign up to receive emailed news, events, opinion, and publication notifications.

Subscribe

Follow

  • Twitter
  • Facebook
  • Linkedin
  • Youtube
  • SoundCloud
  • Instagram
Charhar Institute
  • About Us
  • Founding Chairman
  • Experts
  • Latest Research
  • News&Events
  • Publications
  • Support Charhar
  • Careers

 

"The Charhar Institute is committed to promoting progress in China’s foreign policies and the development of international relations in a more orderly manner."
- Dr Han Fangming,Charhar Chairman

CONTACT US

  • Phone:+86 10 68290431
  • Fax:010-80777830
  • Email:secretariat@charhar.org.cn
  • Facebook:The Charhar Institute
  • Twitter:@CharharINST

©2023 Charhar Institute. All rights reserved. Privacy Policy and Terms of Use