Raghuvir Srinivasan

The not-so-beautiful game at Vienna

Raghuvir Srinivasan | | Updated on: Jun 21, 2018

The noise from the television was deafening as Motu walked into Chotu’s den.

Chotubhai, watching the world cup huh? Whose ears has Luis Suarez chewed off this time?

Ha ha, I don’t know. I’m watching equally thrilling stuff — the OPEC meeting that is now on in Vienna.

How boring, Chotu, why will anyone want to watch wheezing old men arguing with each other around a conference table?

Motabhai, you will understand that soon when you pay ₹100 for a litre of petrol....

What? You kidding me? It can never get that high....

Well, it indeed can if these arguing men are not able to arrive at an amicable decision.

Why don’t you be more helpful and explain?

Motu, the OPEC and other non-OPEC oil producers such as Russia are meeting this weekend to discuss increasing their output because oil prices have shot past $75 a barrel. They’re discussing if the output cut of 1.5 million barrels per day that has been in place since January 2017 should be reversed.

Haan , I saw that our dude, Donald, has been tweeting about high oil prices. So what’s the problem, prices are high and oil is scarce. All they have to do is increase output, hai na Chotu?

Not as simple as that, Motabhai. Oil is as much a strategic and political commodity as an economic one. Prices dance not just to simple demand-supply economics but also to politics.

You mean, it’s about Donald and our macho friend Vladimir?

Not just them, there are the Iranians, the Saudis, the Iraqis, Venezuelans....OPEC has 12 members and there are another 12 oil producers who are not members, so they’re 24 in all and they rarely agree with each other on common issues.

You mean they’re like our navagrahas ?

Shhh Motu....don’t bring religion, I don’t want to be branded communal.

Nahin Chotu, I was only imagining them sitting around that conference table facing in different directions...

Stop imagining and listen to me. The Saudis and the Iranians are arch political rivals who cannot see eye to eye but they have to do business together in the OPEC. The Iranians hate the Americans and after that tweet from Donald dude, they are up in arms saying that the Americans cannot dictate terms to the OPEC.

Wow, this is interesting...

Hang on, there’s more. The Russians and the Americans have their own game going.

The Americans encouraged their shale oil industry to reduce dependence on the Middle East for oil and also to push prices down. The hidden agenda was to undercut Russia, whose main source of revenue is oil. The Russians now want to return the compliment by increasing output so that prices fall and the shale oil producers get hit.

Acha , so is America big in oil?

After the entry of shale oil, America now produces more oil than even Saudi Arabia which has been the biggest producer at 10 million barrels per day. The Russians produce an equivalent amount.

This is more thrilling than a Brazil-Germany match...

Yes, Motu, now throw in China into the mix. The dragon is threatening to impose tariffs on US oil — it imports three lakh barrels of the 20 lakh barrels a day that the US exports. And for good measure it might replace it with oil from Iran, which has been sanctioned by the Americans. That will be a double blow to Donald dude.

Where does all this leave India?

We’re a big guzzler of oil but are yet to be heard at the high table. For now we are squeaking from the sidelines.

Published on June 21, 2018

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