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BRICS: Towards full control of global oil production?

Mon 28 Aug 2023 ▪ 4 min of reading ▪ by Luc Jose A.
Crypto regulation

The 15th BRICS summit ended on Thursday, August 24, with some big news. That of the creation of BRICS+. An expanded version of the organization’s membership. Members that include some of the world’s biggest crude oil suppliers. Global geopolitics are potentially no longer the same.

Les drapeaux des pays des BRICS en fond, superposés de l'inscription "BRICS"

BRICS PLUS, a strong strategic choice…

The BRICS summit came to a close yesterday. One of the crucial points of this year’s event was the accession of a number of countries. This strategic choice brings the number of members of the organization to 11, through the creation of what will henceforth be known as the BRICS +.

This terminology is perhaps no accident. Indeed, it has a certain analogy with OPEC+. This is the energy alliance comprising the members of the Organization of the Petroleum Exporting Countries (OPEC). Plus other major non-OPEC oil producers.

Like OPEC+, BRICS+ comprises the 5 traditional member countries, plus 7 new members. They are Ethiopia, Argentina, Saudi Arabia, Egypt, Iran and the United Arab Emirates (UAE).

Over forty countries have applied to join the BRICS. But for the time being, only these 7 countries have been accepted. Is this a risky choice? It would be naive to think so, given that these 7 new members have oil in common.

Indeed, Saudi Arabia, Egypt, Iran and the United Arab Emirates (UAE) are notoriously important oil-producing countries. Ethiopia and Argentina do not have the same status, but are home to substantial oil resources.

Les BRICS contrôlent désormais 80% de la production pétrolière mondiale

… Who will sign the death warrant for the BRICS petrodollar?

… Who will sign the death warrant for the BRICS petrodollar?

In light of these data, it seems that the projection of the end of the dollar is becoming clearer. This is factually verifiable. Indeed, a cross-analysis of Statista and Wordometer data reveals an interesting detail.

Thanks to their new members, the BRICS in their new guise will virtually control the bulk of the world’s crude oil production. In numerical terms, the BRICS+ will control at least 80% of global oil production.

This figure could rise to 95% if a country like Nigeria, Africa’s leading producer of black gold, joins the organization. This prospect is not yet on the agenda. Even so, it’s clear that the BRICS are striking a blow against the West.

Until now, the West, led by the United States, ensured its hegemony through the petrodollar system. A mechanism in which international oil transactions are mainly denominated and carried out in US dollars.

In other words, the US dollar is used as the reference currency for buying and selling oil on the world market. It is this system that ensures the dollar’s dominance, American geopolitical influence and economic power.

The development around the integration of oil-producing countries into the BRICS certainly signals the death of the American currency. American experts have every right to doubt this. But the exit from the dollar now seems inevitable. This is potentially good news for the crypto industry.

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Luc Jose A. avatar
Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d'une certification consultant blockchain délivrée par Alyra, j'ai rejoint l'aventure Cointribune en 2019. Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l'économie, j'ai pris l'engagement de sensibiliser et d'informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu'elle offre. Je m'efforce chaque jour de fournir une analyse objective de l'actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.