PETROANALYSIS || ARTICLE
A New Global Compact Coming for Oil
It was in WWII when Secretary Harold Ickes tried to give the international oil industry a framework of stability with a strategic vision. For that purpose, he sought an understanding with the British government which then had a decisive role in the production and pricing policy of the Anglo-Persian Oil Company.
Finally, the text and the detailed terms were agreed upon, but what impeded the ratification of the Anglo-American Petroleum Agreement by the US Congress was the mistrust among the different branches and group interests that characterized the complexity of the American oil industry.
Herbert Feis (Yale Law Journal, 1946) made a significant contribution to the understanding of the early steps that later led to the formation of the Organization of the Petroleum Exporting Countries, OPEC.
An additional article by Ruth Sheldon Knowles also published in 1946 in “World Petroleum” is a sort of a roadmap towards the establishment of an international petroleum agreement in which Venezuela under the Presidency of Romulo Betancourt would take the lead.
The idea of the International Compact based on the principle of Prorrationing that had its roots in the Texas Independent Producers, was presented to the Annual Meeting of TIPRO in May 1960 by two oil Ministers, the Venezuelan Perez Alfonzo and the Saudi Abdullah Al-Tariki prior to the formal constitution of OPEC in Baghdad on September 14th.
Fears that the publication by the US Congress of the report on the International Petroleum Cartel were then objectively justified. American foreign policy interests were at stake.
Indeed, the official publication in 1952 of that report by the “Subcommittee on Monopoly of the Select Committee on Small Business ” inflicted serious damage not only to the interests of the American petroleum industry with international activities but also to the very strategic interests of the United States as a superpower.
Today crude prices are dipping and global markets are stressed.
In the past the White House would intervene and a settlement would have been reached.
This time a new player, Russia, is also involved…and it is a wait and see process with regard to if and how this chapter in the oil industry’s history plays out.