A club of oil buyers threatens the dominance of OPEC

When reports revealed that India and China were discussing the establishment of a club of oil buyers, OPEC was probably too busy with its next meeting of 22 June to worry about this dangerous alliance. Now, it may be time for him to start worrying. "The timing is right: the US oil and gas boom is giving us more weight against OPEC," said an Indian official quoted by the Times of India last month after the official start of the talks. After all, the two countries together account for 17% of world oil consumption and they are the ones who would be hardest hit if prices rise due to OPEC actions.

What's more, they might not be alone in this attempt to curb the influence of OPEC on the global oil market. According to Bloomberg's Carl Pope, Europe and Japan, who previously hesitated to participate in anti-OPEC projects, could now participate. The reason they are likely to participate is that unlike previous oil price cycles, there are now alternatives to fossils. fuels. Electrification is where OPEC may have to deal with a future cartel of oil buyers.

India, China and Europe are all very large on the adoption of electric vehicles. Japan is a leader in the manufacture of batteries. If they think about it, these four players could turn the oil market around and paralyze OPEC. Of course, it is a best-case scenario that rarely happens in reality.

Take the example of India. A recent survey suggested that up to 90% of Indian drivers were willing to switch to EVs if the government built the necessary charging infrastructure, reduced road taxes and increased subsidies. Another study identified the price and range as additional barriers to mbad adoption of electric vehicles in India. Due to these challenges, New Delhi has recently changed its ambitious goal of having an all-EV fleet on the country's roads by 2030 to have 30 percent of the electric fleet.

China, for its part, is the undisputed leader in the global adoption of electric vehicles: the country accounted for more than 50% of VE global sales last year in case you thought: " Wait, was not it Norway? " However, this was largely made possible by generous government subsidies for the manufacture of EVs. These subsidies should be reduced to 0 by 2020, and builders are already starting to prepare for a future without state support. It can not be said whether the EV boom will continue after 2020.

This precarious situation with EVs is reason enough for China and India to seek more weight in the international oil markets dominated by oil and gas. OPEC and justify the club formation of buyers. "Europe, on the other hand, is, overall, the most successful in the adoption of electric vehicles and is also very important in terms of the environment. At the same time, it still matters Crude oil and a lot of oil, so he cares about oil prices as a big buyer.

China and India are facing challenges in the adoption of electric vehicles. Europe could help and benefit from it.After all, taken together, Europe, China, India and Japan account for up to 65% of the cars produced in the world, and many of These four countries also consume 35% of the world's crude oil and would like to reduce that figure.

According to Pope, if they meet, they would be able to negotiate a longer pbadage. gradual or faster to electric vehicles .It all depends on whether OPEC would accept hand hold prices lower or not.

A more skeptical point of view would highlight the challenges of adopting electric vehicles, such as subsidies and infrastructure. It would take time to be overcome even if everyone was playing together. Yet, in the long run, an alliance of oil buyers could be a force to be taken into account by oil producers, and these must start paying attention now.