OPEC must seize the opportunity to modernize its image

OPEC’s role has evolved considerably since its inception in 1960, but Western countries’ antipathy toward the bloc has been constant. For most of its history, being public enemy number one has been irrelevant or desirable to OPEC. However, in 2022, the time is suitable for the group to actively cultivate an image as a constructive element of the world order. Its current public relations efforts are poor.

OPEC is frequently blamed for the 1973 oil embargo when it was, in fact, the Organization of Arab Petroleum Exporting Countries (OAPEC) that was responsible, and this reflects its perennially weak communications strategy. Since then, the group has been universally disliked by governments and ordinary people in the West for many reasons.

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First, the perception that OPEC is a cartel that seeks to restrict output and hence raise prices to the detriment of consumers and the benefit of producers draws the ire of societies that favor free enterprise and competition.

Second, while the evidence on its actual effectiveness is mixed at best, there is little doubt that OPEC has a reputation for successfully raising oil prices, thereby causing economic recessions and inflation during the 1970s and leading to higher gasoline prices for consumers.

Third, as western societies have become more environmentally conscious, OPEC has become increasingly associated with resistance to the green energy transition. It accounts for almost 40 percent of world oil production and 80 percent of global oil reserves.

OPEC embraced its image as a disruptor in the global economy for a while. It was partially due to its member states’ sense of power. Still, the group also represented an international Robin Hood during the 1970s and 1980s, as it took care to redistribute some of its profits to poorer countries via foreign aid and investment. This arrangement also benefited richer countries, which were happy to find a willing scapegoat for their economic problems.

OPEC is frequently blamed for the 1973 oil embargo when it was, in fact, the Organization of Arab Petroleum Exporting Countries (OAPEC) that was responsible, and this reflects its perennially weak communications strategy, Omar Al-Ubaydli writes. (File photo: Reuters)

As we approach the 50th anniversary of the first oil embargo, the world has changed, and so too have the interests of OPEC’s member states. Heavyweights such as Saudi Arabia, the UAE, and Kuwait want to be on good terms with the West.

They want to attract foreign direct investment by cultivating reputations as constructive partners. Moreover, the prospects of oil earnings are decidedly negative, and so one can no longer bite one’s thumb at countries such as the UK and US while basking in seemingly inexhaustible oil wealth.

However, OPEC’s reputation is arguably at an all-time low. Five years of depressed oil prices in 2014 led to a collapse in oil investments, inevitably creating a supply crunch just as the world economy recovered from the Covid-19 pandemic and made OPEC look like an extorting mafia. The resulting rise in oil prices has sharpened as Sanctions have hit Russian oil production.

With the group rebuffing the US’ request for extra production, OPEC is receiving universally negative coverage across media outlets. It is drawing harsh criticism from world leaders when threats to their electoral prospects exist directly because of high prices at the pump.

Ironically, OPEC’s stated mission is to avoid oil prices’ boom and bust cycles that damage producers and consumers. The long investment cycle and high capital outlay required for oil production are what causes price instability, but managing global oil prices can dampen the cycle’s amplitude, which is what OPEC is trying to do. Yet that is not how its actions are viewed. In 2022, these negative perceptions will damage countries’ economic and political goals, such as Saudi Arabia and the UAE.

A glance through the press releases section of OPEC’s website provides little cause for optimism. The whole website looks like it is 15 years old, and the content of its communications is opaque, dry, and uninteresting, doing nothing to counter the adverse narrative. It conveys an image of an organization that is a relic of the past, which is entirely apt given its association with fossil fuels.

Changing the narrative is not easy, but can be done if OPEC’s leadership develops an effective long-term strategy. The critical pre-requisite is a belief that communicating openly and positively is desirable, which means fewer closed-door meetings and boring communiques summoned from the 1980s.

Many analysts view the current rise in oil prices as the black gold’s last hurrah. Such predictions have been wrong so frequently that we must continue to take them with a pinch of salt. Nevertheless, OPEC’s communications strategy doesn’t only need a facelift – it needs heart surgery. It must ensure that its member states are perceived as the global economy’s friends, not its enemies.

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