A few weeks ago,and thirty five years after the Arab oil embargo, the leaders of OPEC met in Vienna and decided to enact an effective production cut of half a million barrels a day (mbd), reducing overall OPEC supply to 28.8 mbd. This cut, a deliberate effort to prop up prices despite the worsening global economic crisis, was quite in character for the oil cartel. OPEC produces today about as much oil as it did thirty years ago despite its ownership of 78 percent of global proven reserves of conventional crude oil and even though the global economy and non-OPEC production have doubled over the same period. And this OPEC domina-tion of more than three-quarters of the world’s crude is more than matched by oil’s
monopoly of over 95 percent of the world’s transportation fuel.
This meager OPEC production level is more stunning in light of the fact that
in 2007, the cartel expanded its member roster to include Ecuador and Angola,
which together produce about as much oil as Norway.
Deeply embroiled in a struggle against radical Islam, nuclear proliferation, and
totalitarianism, the U.S. faces a crude reality: Saudi Arabia and Iran, the same
Sunni and Shi‘ite theocratic and dictatorial regimes that most strongly resist
America’s efforts to bring democracy and the rule of law to the Middle East, will
increasingly sit in the driver’s seat of the global economy. As the leading countries
of OPEC they are in more of a position each year to thwart each and every U.S. for-
eign policy priority. While the U.S. economy bleeds, petrodictatorships around the
world—even at oil prices well below last summer’s stunning $145 peak—are on
the receiving end of staggering windfalls. With 10 percent of the world’s oil
reserves and the world’s second largest natural gas reserve, Iran’s President
Mahmoud Ahmadinejad seems unfazed by the prospects of international sanc-
tions against his country as a result of its efforts to develop nuclear weapons. Oil
also lubricates the so-called Bolivarian revolution led by Venezuela’s President
Hugo Chavez, who is using Venezuela’s oil wealth to buy political influence in the
Western Hemisphere and to consolidate, now with Russia’s help, an anti-U.S. bloc
in the region.