OPEC Conflicts and The Future of the Oil and Gas Industry


The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization that controls close to forty percent of the world’s total oil production. The COVID-19 pandemic exposed the extremely brittle state of OPEC as we witnessed one of the most significant oil conflicts in history.

In the article, we will discuss the recent Russian-Saudi Arabian conflict over oil supply cuts and the future of the oil and gas industry. Let’s get started.

OPEC Conflicts—Saudi Arabia and Russia Oil Price War

Saudi Arabia, the cartel’s most powerful member, launched a price war against Russia, which sent prices into free fall. The markets were already suffering huge financial losses from the global pandemic. This conflict between both countries in early March resulted in the biggest drop in oil prices in history, with the price becoming negative around mid-April.
The impact of the oil price war between two oil-producing giants impacted the entire world. Multiple oil producers in North America cut new drilling projects. Iraqi and Kuwaiti oil producers also offered price discounts to their buyers. Norway saw a drop in its currency to historic lows against the Euro.
After intentional pressure and conferences between world leaders, the oil price war finally reached its conclusion. Both countries signed a historic multilateral deal to lower global oil production. The agreement was in danger when Mexico refused a big output reduction, but the United States intervened to ensure the deal went through.

Why Is Canada Not Part Of The OPEC?

OPEC was formed in 1960 when Canada was not among the ranks of oil-producing countries. Canada can qualify to become a part of OPEC by 2025 if its export capacity reaches three million BPD. However, as per NAFTA rules, Canada must set the oil export price to the US at the same price as domestic consumption, and following OPEC pricing rules would raise a conflict with these terms.

The Future Of The Oil And Gas Industry

The Canadian energy industry is in the midst of a global transition. To remain competitive, companies operating in the oil and gas industry need to develop strategies to create a strong portfolio. Canadian oil production is anticipated to increase by 1.27 million barrels per day (b/d) by 2035, which shows a promising outlook.
Canada has an opportunity to increase its global oil and gas market share. However, the big players must address the regulatory and policy challenges that can impede their growth rate. Moreover, oil and gas companies are likely to explore options to automate their processes and leverage the latest oil rig instrumentation to maintain competitiveness.  

About Contact Instruments

Contact Instruments is a leading manufacturer of drilling rig instrumentation. They provide durable, top-quality drilling products, including weight indicator systems, pump stands, trash pump parts, and more. If you’re interested in finding out more about their products, call 780-955-8998 today.

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