Introducing The New Face Of OPEC

Just over a month ago Nigerian, Mohammed Sanusi Barkindo, was named the acting Secretary General of the Organisation of the Petroleum Exporting Countries? (OPEC), replacing Libya’s Abdalla El-Badri who had been in the post for 9 long years, since 2007. Barkindo’s new appointment as Secretary General commences on the 1st of August 2016.

Barkindo takes the top position at one of the most challenging times OPEC has ever faced. Sustained low oil prices, continued growth in US fracking operations shifting supply trends, and tension between OPEC members Saudi Arabia and Iran.

However, Barkindo is not new to these types of challenges. Prior to his appointment last month he was the managing director of the Nigeria National Petroleum Corporation (NNPC) between 2009 to 2010, was Nigeria's representative to OPEC's Economic Commission Board for fifteen years, and even served as acting Secretary-General of OPEC in 2006.

The 72 year old, who originally studied in the UK and Caribbean, was also a director of the National Engineering and Technical Company (1991–1993), chairman of Stirling Civil Engineering Nigeria Limited (1991–2003) and chairman of the Federal Radio Corporation of Nigeria (2003–2005).

Barkindo will hope his extensive experience will help him navigate the OPEC ship through the stormy years to come. He will be buoyed by this week’s 23 cent gain in Brent Crude futures to $50.58 per barrel (as of July 5th 9:30 GMT). U.S. Crude was not left behind either as the Clc1 held gains of 17 cents to $49.16 per barrel.

However, there is no denying the severe volatilities that crude oil experienced over the last six months, making it nearly impossible to predict whether the "black gold" was going up or down at any particular time. Nevertheless, the main trend remained in an upward movement this week as investors continued to redevelop confidence in the once reliable commodity.

We can give Barkindo some credit for the rally in oil prices this week, after recent comments made by the OPEC chief and Khalid al-Falih, Saudi's energy minister. Perhaps the two most powerful men in OPEC agreed that the global oil market is nearing a point of normalisation. The duo also noted that an uptrend in crude oil prices would confirm the return of balance to the crude oil markets.

Barkindo was in Saudi Arabia as a guest of King Salman bin Abdulaziz for the Ramadan meal of iftar, in the holy city of Mecca. He no doubt also took the opportunity to discuss the impact of Iran re-entering the global oil market free of sanctions, which have held them back for many years. However, the oil rich Persian nation has hostile relations with Saudi Arabia and is keen to finally increase production to make up for export revenue they have missed out on, potentially destabilising a precariously balanced and over-supplied sector.

Barkindo will need to address the Iran situation, and has also planned talks with Russia “to discuss global oil markets, not mutual actions on global markets”, said Roman Morshavin, from the Russian Energy Ministry. The recent combined effort of OPEC and Russia to freeze production failed, with Saudi Arabia refusing to take part in any proposal that did not include Iran.

Back in Barkindo’s native Nigeria a June ceasefire with the Niger Delta Avengers militant group allowed a boost of output from 90,000 bpd from May, to a total 1.53 million bpd. Unfortunately, the ceasefire seems to have been temporary, as the Avengers again made headlines on Sunday with fresh attacks on oil infrastructure in the Delta.

All of this turbulence, both internal and external, has called OPECs very existence into question, with several key figures calling for the dissolution of the oil cartel. If Barkindo thought his appointment to the hot seat was difficult, he will be looking anxiously ahead.

Can he influence and steer the cartel to what it was designed to achieve, a common sense win-win amongst member and consumer states? The world will be closely watching (and hoping) this August onwards. 

What do you think should be his top priorities in office?

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