Jim Armitage: Oil supply squabbles

And you thought the EU was dysfunctional. Opec members’ inability to agree to output cuts at Doha showed just how divergent the oil cartel’s warring interests really are.

Cue renewed claims from pundits that Opec’s days are numbered. What with US shale shifting the whole structure of world oil supply, they say, the squabbling old guard are an irrelevance.

Don’t be so sure. Opec has been the most successful cartel in recent history. For 56 years, through wars, hostage crises and other conflagrations, it has controlled the key commodity of global economic growth, generating trillions of extra dollars for its members.

It’s messy, sure. Member countries lie about their output and rivals bicker. US shale oil will curb some of its power over the next decade or more.

But Opec still controls 70% of the black stuff on the planet. That makes a decade or two of cheap US shale seem pretty small fry. Furthermore, keeping the crude price this low makes US shale uneconomic. That’s no bad thing for Opec.

Don’t write it off yet.