José Lev Gómez
José Lev Gómez

OPEC and Saudi Arabia: A broad evaluation of their role in the global economy

In November 2016, the Organization of the Petroleum Exporting Countries (OPEC) agreed to give way to the cut off two million barrels of oil per day, raising the value of international oil prices by 7% in just one week. In fact, countries such as Russia, which is not a member of OPEC, pledged to reduce production by 600,000 barrels of oil per day. Thanks to this agreement, Iran -for example- will now increase its daily output from 3.7 million to 4.3 million barrels of oil per day. However, why do these global powers unite in a cartel like OPEC?

After the Yom Kippur War in 1973, the Arab League led by Saudi Arabia and Egypt decided to reduce by 5% per month the sale of oil to the United States and its allies. However, this “Arab anger” was a response to the military aid that the United States provided to Israel during the Yom Kippur War in 1973.

Although this embargo lasted only six months, the so-called ‘1973 Oil Crisis’ caused a global economic chaos. Nonetheless, this crisis was key for Saudi Arabia’s-where shallow oil was discovered in the 1930’s- economic boom after the crisis. At the beginning of the 20th century, Saudi Arabia was a poor country, with no roads and a very weak army. After the settlement of many American oil companies there, the United States established multiple military bases to protect its interests. In danger scenarios, as when Saddam Hussein invaded Kuwait in 1991, this protection was key for Saudi Arabia not to be at risk. Despite the 1973 Oil Crisis, Saudi Arabia maintained its oil sale to the West at the end of the embargo. This is one of the reasons why Saudi Arabia maintains “good” relations with the United States.

This is why Donald Trump did not include Saudi Arabia, even though 2,000 Americans have been killed by Saudi citizens, on the list of Arab countries that were banned from entering the United States. Do you now understand? On the other hand, Saudi Arabia is the largest oil producer in the world, with 10 million barrels per day despite not having the largest oil reserves in the world. Venezuela has the largest oil reserves, followed by the United States.

That is why joining OPEC is not a miracle, but part of Saudi Arabia’s intentions to privatize a large part of Saudi state oil company ARAMCO, and to save the economies of the Gulf kingdoms. Saudi Arabia, despite falling of oil prices between 2014 and 2015, was reluctant to take serious steps as this would, for example, delay the full entry of the renewable energy sector into the international market. Undoubtedly, the world learned in 1973 that OPEC and Saudi Arabia are key elements that can determine the direction of global economy.

About the Author
•José Lev Álvarez Gómez is a medical student at the American University of Antigua - School of Medicine. •At the undergraduate level, Lev Álvarez holds a B.S. in Neuroscience with a Minor in Israel Studies from The American University in Washington, DC (2015-2019). During college, he interned at the House of Representatives of Puerto Rico, the College Republicans National Committee and The David Project (all in Washington, DC). He then completed a diplomatic internship at the Kurdistan Regional Government (Iraqi Kurdistan) Delegation in Washington, DC. José also worked as an Israel related events coordinator for American University Hillel and as a program assistant for the Center for Israel Studies at the American University. •At the graduate level, Lev holds an MA in International Geostrategy and Jihadist Terrorism from Instituto Internacional de Estudios en Seguridad Global (INISEG)-Madrid, España/Università Telematica Pegaso in Naples, Italy and in 2020 completed a bioethics course at Harvard University. •From 2019-2021, Lev served in a special unit in the Israel Defense Forces (2019-2021) and ended his service as a sergeant. •Álvarez Gómez has a blog in the Times of Israel, is a columnist for Diario Judío (Mexico), and has written for several newspapers such as El Nuevo Día (Puerto Rico), El Vocero de Puerto Rico (Puerto Rico), Latino Rebels (United States) and Red Alert Politics (United States). He currently collaborates as an analyst and investigator at INISEG-Madrid. Lev, who has published more than 140 opinion articles, is the author of two books: "Panorama Internacional: Una mirada a la geopolítica e historia mundial (2016-2017)" and "Puerto Rico: El nocivismo del insularismo y el colonialismo", and completed his minor’s independent project and his MA thesis on the "The Relations of Israel with Basque and Catalan Nationalism and its future geopolitical impact”. José speaks and writes Spanish and English excellently, speaks and writes correctly Catalan, Galego and Ladino, and has professional working proficiency knowledge of Hebrew.
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