# OPEC+ Realignment ## Overview OPEC+—the expanded cartel that includes OPEC's traditional members plus Russia and other non-OPEC producers—represents a significant evolution of the global oil order. Its formation in 2016 and subsequent actions signal a shift in the power dynamics that have underpinned petrodollar pricing for decades. The inclusion of Russia alongside Saudi Arabia in production decisions has geopolitical implications that extend well beyond oil markets. ## From OPEC to OPEC+ Traditional OPEC, founded in 1960, was dominated by Middle Eastern producers with Saudi Arabia as the swing producer. Its relationship with the US was fraught but ultimately symbiotic: OPEC priced oil in dollars, and the US tolerated the cartel's existence despite its price-fixing nature. The expansion to OPEC+ brought Russia—the world's second-largest oil exporter—into the fold. This was pragmatic: coordinating output between OPEC and Russia was necessary to manage prices effectively in a world of shale oil. But the geopolitical subtext was profound. Russia, a nation under Western sanctions and actively seeking to undermine dollar dominance, now had a seat at the table governing the world's most important commodity. ## Key Decisions Defying Washington OPEC+ has repeatedly demonstrated willingness to act against explicit US wishes. In October 2022, the group announced a 2 million barrel per day production cut despite intense American lobbying—a decision that raised gasoline prices ahead of US midterm elections and effectively aided Russia's war financing. The Biden administration called it a hostile act, with some lawmakers advocating the NOPEC bill (which would allow antitrust action against OPEC members). Further cuts in 2023 deepened the rift. Saudi Arabia implemented voluntary additional cuts of 1 million barrels per day, signaling that Riyadh was prioritizing its own revenue needs and OPEC+ cohesion over Washington's preferences. ## The Russia Factor Russia's role in OPEC+ is particularly consequential for the petrodollar. Moscow has been the most aggressive major economy in pursuing de-dollarization—accepting rubles and yuan for energy sales, building alternative payment systems (SPFS), and advocating for commodity-backed currencies within BRICS. Its integration into the production-management framework alongside Saudi Arabia gives it influence over the very system that upholds dollar pricing. The brief 2020 Saudi-Russia price war—when Russia refused cuts and Saudi Arabia flooded the market—demonstrated that the alliance has limits. But its repair and subsequent cooperation suggest both sides view the partnership as strategically valuable despite friction. ## Implications for Dollar Pricing OPEC+ as a body has not moved to abandon dollar pricing, and any such decision would face enormous logistical and political hurdles. However, individual member states have taken steps that chip away at dollar exclusivity. Saudi Arabia has discussed yuan-denominated sales with China. The UAE has settled LNG trades in dirhams. Russia prices much of its crude in rubles or yuan. These bilateral moves, while small individually, establish precedents and infrastructure that could enable broader shifts. The risk is not a sudden OPEC+ announcement abandoning the dollar but a gradual erosion—a growing share of oil trade settling outside the dollar system, reducing the structural demand that underpins the currency's reserve status. ## The New Multipolar Energy Order OPEC+ increasingly operates as a multipolar institution rather than a US-aligned one. Its members include nations allied with China (Iran, Venezuela, Russia), nations hedging between East and West (Saudi Arabia, UAE), and nations with their own strategic agendas. This diversity of interests makes it a less reliable pillar of the dollar-centric energy order than the old OPEC was during the height of petrodollar cooperation. ## Links - [[Petrodollar MOC]] - [[OPEC and the Dollar]] - [[Saudi-US Relationship]] - [[De-Dollarization Trends]] - [[Russia Sanctions and Dollar Weaponization]] Tags: #investing #macro #geopolitics #commodities #kp