Mikhail Krutikhin: The Emirates may not stop at the exit from OPEC. Interview

OPEC was created in order to prevent the price of oil from falling and so that its members could earn money. Has it stopped working?

So they cannot stop the fall in oil prices. So they tried, tried, limited themselves, limited themselves – quotas, voluntary restrictions in Saudi Arabia. Another 8 countries from OPEC+ have committed to reduce production. But it doesn’t help. Doesn’t work.

Since the shale revolution began in America in 2011, it suddenly turned out that there were very powerful forces outside OPEC with serious production potential. And not only the United States, which suddenly became a net exporter of hydrocarbons by 2020, began to enter the scene, but other countries also caught up.

Guyana alone, for example, is worth it. I think in a year and a half or two, it will have 3 million barrels of production per day. And no matter how much OPEC and OPEC+ try, nothing helps. There are a huge number of participants who simply cannot produce more. And therefore they do not even participate in production restrictions. Russia, for example. As much as it can produce and export, it produces and exports. Russia only once, in 2020, responded to a request to fulfill its obligations and begin to reduce production. The rest of the time, Russia ignored OPEC.

Very often, the UAE spoke at OPEC ministerial meetings and said: we don’t like these restrictions. You must either raise the quota or remove the restrictions completely, because we have plans: we are going to produce up to 5 million barrels per day in 2027.

OPEC is no longer doing its job. And we saw this when it became known that the Emirates were leaving it. A terrible hysteria began on social networks: “that’s it, the market will be flooded with cheap oil, prices will collapse, Russia will end” and so on. I see that futures prices have begun to rise rather than fall. And the market no longer pays attention to all the movements of OPEC.

Why have prices increased?

The price has risen because there have been reports from the US that the Americans intend to continue their blockade of the Iranian coast, that they will prevent Iran from releasing oil to the market, and that this could create some possible shortages since no one is going to open the Strait of Hormuz. The price took all these risks into account and went up. And there is zero attention to the Emirates’ messages.

And then the Emirates have another argument: they are members of OPEC, and suddenly one of the OPEC members begins to launch missiles and drones at other OPEC members, trying to destroy their oil infrastructure. And how can they be in this organization together? How can they be there together with Venezuela, which has long been no longer independent, but an appendage of the United States in terms of production and export levels?

Today there were the first reports that Venezuela seems to be planning to leave OPEC too. Because she has nothing to do with the cartel that manipulates the spoils. Iraq may be next, I think. He also showed dissatisfaction.

The Emirates have another wonderful reason: they are in conflict with Saudi Arabia. Saudi Arabia plays the most important role in these offices, preventing the Emirates from advancing with the spoils. They even came to the point of a military clash; their groups in Yemen are starting to fight each other. And then Saudi Arabia is showing strange behavior, dragging a military contingent from Pakistan onto its territory. In response, the Emirates immediately demanded that Pakistan return $3.5 billion. How can all these countries live in one organization?

Is OPEC a way for Saudi Arabia to limit its competitors?

This is the most important thing. Moreover, since last summer a group of experts has been working there, trying to formulate a new formula for OPEC activities. They introduced the “Sustainable Mining Potential Index”. Such a beautiful index.

And suddenly it turned out that only Saudi Arabia and the Emirates have some kind of sustainable reserve production potential, which can bring production to a new level within three months and maintain it for at least a year. But other countries do not have such potential. They extract as much as they can. The point of these movements was that now the OPEC strategy could be determined not by a vote of all participants, but only by those countries that have the opportunity to influence the level of production. That is, Saudi Arabia and the UAE. And they were going to introduce this new formula from 2027 instead of quotas. But the Emirates understand: since the Saudis are big, they have more production, and a larger index, they will crush them in decision-making.

What is your prediction that OPEC will eventually collapse?

Not necessarily. It can be an empty shell, it can last as long as it wants. Something else completely worries me. Among my acquaintances there was an opinion that the Emirates will not stop there and may withdraw from the Cooperation Council of the Arab States of the Gulf. Because this Council has done nothing to counter Iranian aggression.

And there were messages from my Arab friends who are familiar with this situation that they could also withdraw from the League of Arab States, which also cannot do anything.

And then there is a completely fantastic assumption that the Emirates may also leave the Organization of Islamic Cooperation. 57 Muslim countries, including the Camoros Islands. Belonging to this Islamic community did not help the Emirates in any way. Even in words.

But the Iron Dome battery from Israel helped.

There are literate people in the Emirates. While maintaining all the external signs of a Muslim state, they will be friends not with Muslim countries, but with the West, Japan, and South Korea. They began to prohibit their students from going to British universities and deprived them of scholarships if they wanted to study there. Why? Because they return from there as “Muslim brothers.” Jihadists.

Are the Emirates the only ones unique? Are they outcasts in the Islamic world? Or is this the beginning of some new trend?

I really hope this is the start of a new trend. Now, if Iran flies out of the Islamic world, if the regime there changes, that will also be very interesting.

And I even assume that something may change in those countries from which no one expects it. Qatar, which breeds terrorists everywhere, finances the “Muslim Brotherhood” and jihadists in American and British universities. Even there, some very interesting trends are emerging. There, the local intelligentsia begins to express ideas that are incompatible with the principles of Islam: a critical attitude towards truths. I was at a conference in Qatar. Audience, women enter one door, men enter another, sit separately, women are all in black. And suddenly these women begin to call for a critical understanding of reality, for a transition from an economy based on the exploitation of natural rent to an economy based on knowledge, which should be scientific, and not a repetition of Islamic rules. It seems that the country’s leadership is taking a different position, but such a wave is rising from below.

In the Arab world, the elites are believed to be pro-Western and the population is largely anti-Western. Unlike Iran, where the opposite is true.

In Iran, Islam is very external. This was also noticed by Gubino, who was traveling around Iran. The Iranians keep shouting every two words: “Mashallah! Inshallah! Alhamdulilah!” And if you scratch it, it’s so far from his inner world, from his everyday worries. It’s all superficial.

The Shah once said: “Firstly, I am an Iranian. Secondly, my nationality. And thirdly, I am a Muslim.” And this irritated Khomeini so much; for him there are no nationalities at all. There is a Muslim and a non-Muslim. That’s it, period.

And in Iran everyone still feels like Iranians.

Blockade of Iranian ports – how effective is it? There are different estimates. Trump said that three more days and all oil production would stop. Three days have long passed. What is your assessment?

Probably in half a month or a month, and it will begin to be felt. Production should be reduced by one and a half million barrels per day by mid-May.

I can already see that they are suspending production. Any oil worker will look and see an eerie number of gas flares over Khuzestan. What is it? Why did they suddenly start burning gas in such quantities? And the Iranians used gas not only for domestic consumption. They pumped it back into the oil-bearing formation in order to displace the oil, and so that the oil would come out of the ground more actively. And when they stopped pumping gas there, they began to burn it in huge volumes. This means they are already cutting back.

And when they start mothballing and closing wells, this will be very serious.

And when will this affect salaries for the security bloc, since this is probably Trump’s goal?

I think so, because it is impossible to hope that there will be an uprising, not a protest, but an uprising, if the repressive apparatus does not go over to the side of the protesters.

Pezeshkian begins to say that soon the money for salaries will run out. Secondly, the country’s leadership no longer has hope for personnel. And the checkpoints in Tehran are run by Iraqis, Afghans, and Pakistanis. They no longer trust their own people. This is a signal.

Energy Minister calls for energy savings: Summer is coming, you can cut your electricity tariff by 30% if you reduce your consumption by 30%. They no longer know what to do.

It turns out that, by and large, there is no point in resuming military action against Iran now? Should we just wait for an uprising?

I’m trying to find a purpose, some kind of target for these military actions. I have long said: there is no point in occupying Khark. Take control of the coastline in the Strait of Hormuz? For what? And how? There won’t be enough strength there. And then Iran will launch drones from the central part of the country towards tankers in the strait. Therefore, my only option was to land troops in the capital, organize a provisional government and begin building a new Iran from there.

I looked, the last Israeli raids before the ceasefire were on the eastern part of Tehran, where there is such a chain of military garrisons. Tehran was cleared.