Good Riddance to OPEC

These are hard times for multinationalism. The North Atlantic Treaty Organization lies in tatters, the World Trade Organization is on life support, the World Health Organization is losing its wealthiest member, and I bet you didn’t even know there was an International Tribunal for the Law of the Sea in Hamburg. But just to show that every cloud has its silver lining, the Organization of the Petroleum Exporting Countries, or OPEC, is coming unglued just as the price of oil heads into the stratosphere. OPEC’s demise can’t happen fast enough to suit me.

The irony here is that OPEC is practically the only multilateral organization that the Trump administration hasn’t been trying to destroy. Yes, Trump denounced OPEC as a “monopoly” near the start of his first presidential term, but near the end of that term, he said he’d grown rather fond of the oil cartel.

“For many years I used to think OPEC was very unfair,” Trump said in April 2020:

I hated OPEC. You want to know the truth? I hated it. Because it was a fix. But somewhere along the line that broke down and it went the opposite way. And we have a tremendously powerful industry in this country now, number one in the world, and I don’t want those jobs being lost.

OPEC never stopped being “a fix”—which is to say an illegal international cartel that U.S. courts let off the hook through an overly generous reading of the “act of state” doctrine. (OPEC is a cartel, not a state, and it operates out of Austria, which is not an OPEC member.) Trump started liking OPEC not because OPEC cleaned up its act—it didn’t—but because the fracking boom made the United States, for the first time in seven decades, a net oil exporter, thereby positioning the American petroleum industry to receive maximum benefit from OPEC price-fixing. In addition, the Iraq War bequeathed the U.S. considerable influence over one of OPEC’s biggest oil producers, and Trump’s lightning-quick Venezuela invasion earlier this year gave the U.S. at least aspirational control over oil production in yet another OPEC nation. Practically speaking, the U.S. these days is an OPEC fellow traveler.

Which makes it all the more delightful that this week the United Arab Emirates announced it will be leaving OPEC and OPEC+, the enlarged cartel that includes Russia, Kazakhstan, and Mexico. The UAE is OPEC’s third-biggest oil producer (after Saudi Arabia and America’s client state Iraq), so its departure is a real blow to the cartel. The UAE had been pushing OPEC for years to allow it to increase production, mindful (as its crypto business partner Trump is not) that the future lies in alternative energy sources. Iranian attacks on UAE’s oil and gas facilities, having demonstrated the fragility of the oil supply chain, firmed up the UAE’s conviction that it’s best to make hay while the sun shines. Meanwhile, Saudi influence over UAE has lately diminished as the two countries sided with opposite warring forces in Yemen and Sudan.

The UAE isn’t the only onetime OPEC member that’s lately concluded that the cartel no longer suits its needs. Qatar left OPEC in 2019, Ecuador in 2020, and Angola in 2024. Indonesia suspended its OPEC membership in 2009, rejoined in early 2016, then quit again at the end of that year.

The reasons each of these countries left OPEC differ, but there’s a common theme: Oil just ain’t what it used to be. Petroleum still claims the largest share of global energy consumption, but that share has declined since 1973 from 50 percent to 32 percent. In absolute numbers, oil consumption is still rising globally, but in developed nations it’s fallen since 2000. Rising oil production, not only in the United States but also in the non-OPEC members Canada, Brazil, and Guyana, further reduced OPEC’s influence. And it hardly fosters OPEC unity when one OPEC nation attacks another. In addition to the departing UAE, Iran has hurled missiles recently at Iraq, Kuwait, and Saudi Arabia. None of them was especially crazy about their OPEC partner Iran even before this war began.

For anyone who remembers the 1973 oil embargo, it’s astonishing to observe how respectable OPEC has become since then—praised endlessly for bringing “stability” (read: artificially elevated prices) to oil markets. Remarkably, UAE’s leaving OPEC prompted no official statement from either the White House or the State Department. It was almost as if Trump’s press officers needed to be told whether the breakup of an illegal 66-year-old cartel would be good news or bad.

Trump finally broke the logjam Wednesday, saying, for once, the right thing. “I think it’s great,” Trump said. “I think ultimately it’s a good thing for getting the price of gas down, getting oil down, getting everything down.” Even so, Trump didn’t say, as he would have a decade ago, “Let’s hope this is the end of that infuriating price-fixing conspiracy.” Rather, he said dispassionately: “They’re having some problems in OPEC.”

They are indeed. May the future bring them many more.