TORONTO: The Organisation of the Petroleum Exporting Countries is dead, pundits are prophesying.

Questions about Opec’s viability as the dominant force in the energy world are making rounds. Oil intensity has gone down. US fracking boom, the rise in output all around and the growing emphasis on controlling carbon emissions have helped alter the oil topography, altogether.

Founded in September 1960, the objective of the organisation was to ensure greater control of oil producers over their destinies and not to let the oil majors – often termed as seven sisters – control it. Although some commotion beneath the surface was palpable even before, yet when in August 1960 the seven sisters, the concessionaries of the resources, opted to reduce the price of oil, without the consent or approval of the resource owners, the final act was enacted. Opec was born, asserting the resources belong to the nation states and not the so-called seven sisters.

Beneath the surface, the very idea of resource nationalisation was also growing, contributing to the move. This was in fashion then. Opec made slow progress initially, reaching its zenith only after the Yom Kippur war. In the aftermath, producers for the first time enjoyed real control over their precious asset – the black gold. Close coordination among the producers’ was the key to success. Consequently, oil prices went up manifolds. Petrodollars began flowing in, for the first time in the real sense. And this helped bring about a complete change in the very texture of the entire oil producing region.

Overnight, Opec became a thorn in many eyes. The International Energy Agency (IEA) was delivered in Paris, by the likes of Henry Kissinger, the Realpolitik practitioner, to basically counter the influence of Opec and to wrest the control of oil markets from the hands of the producers. The fear of Arab control on oil supplies propelled many in the western world to try and work towards some sort of energy independence.

Efforts began paying off. Over the decades, slowly and gradually Opec has been yielding space. Today, it no more controls the market. New frontiers have emerged. Market forces have taken over. And everyone, from Abdullah El Bedri to Khaled Al-Falih recognise that.

And consequent to all this, Opec market share began dwindling and currently Opec controls roughly just 1/3rd of the global market. The rest is controlled by non-Opec suppliers.

With the shale oil revolution, the political influence of oil producers too waned drastically. This impacted the regional geopolitics greatly. Growing efficiency has also helped the transition.

There are many manifestations of the changed topography. Not long ago, a fair price was Opec mantra. No more, it seems. “We don’t care about oil prices,” Prince Mohammed bin Salman asserted in an April 25 interview in Riyadh. “$30 or $70, they are all the same to us. We have our own programs that don’t need high oil prices.”

Price thus is no more the real issue. Preserving and keeping intact the market share is now the objective number one. The recently unveiled Saudi ‘Vision 2030’ is a clear manifestation of it. Oil could not propel Saudi Arabia into the next phase of development. Oil alone would not ensure prosperity – and for long. Hence tactical changes to the overall strategy became a necessity.

There is plenty of oil around – from shale to oil sands and from Arctic to Iran. The overall, market sentiments have switched from Peak Oil to Peak Demand. Markets stand totally transformed.

And the ongoing climate debate is beginning to hurt too. The emphasis to wean away the world from fossil fuel is beginning to impact. Consumption growth is slowing.

Other pressures are building up too. Electric cars may not be far off. Some say they could be just round the corner, especially if the oil prices tend to get higher, in the shorter run.

Demand security is missing. With the climate change echo growing, the issue of stranded assets is also beginning to haunt some.

In the changing scenario, the role of Opec has changed. It would still be there down the road, but its clout would continue to dwindle in the years to come, one could not help conceding.

Daniel Yergen had a point, when he told the Financial Times, recently: “The era of Opec as a decisive force in the world economy is over.”

Published in Dawn, May 29th, 2016