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On 30th November, Alexandre Silveira, the Brazilian Minister for Mines and Energy, confirmed that Brazil had accepted the invitation to join OPEC+, with its membership being effective as of 2024. This was a move that caught many by surprise, both domestically and internationally, given how President Lula da Silva’s government has positioned itself regarding to the climate agenda ever since he assumed power in 2022.
President Lula’s campaign was built on a pledge to “put respect for the environment back at the heart of his action and to restore Brazil to its rightful place on the international stage”. A year into his campaign and Brazil has settled into a respectable role in international diplomacy, both in South America and beyond. The Brazilian government has brokered important commercial deals with Saudi Arabia and is attempting to broker a deal between the European Union and Mercosur, in addition to successfully campaigning to host the COP 30 event in the city of Belem in 2030. Therefore, in the same vein of a resurfacing protagonist role in international circles, it should come as no surprise that Brasilia would accept an invitation to join one of the most influential intergovernmental organisations. However, it is not as simple as that.
OPEC at a glance
The Organization of the Petroleum Exporting Countries, or OPEC, is a consortium of major oil-producing nations that work together to coordinate and unify petroleum policies to ensure stable oil markets and secure fair prices for both producers and consumers. Founded in 1960, OPEC’s decision-making has been pivotal in influencing global oil prices and energy dynamics. On the other hand, OPEC+, which Brazil will be joining in 2024, is a coalition of oil-producing nations that collaborate on coordinating oil production policies which include non-OPEC members. In its own right, OPEC+ has become a key player in shaping oil production strategies on a global scale.
Why did Brazil accept the invitation to join OPEC+?
Unexpectedly, Brazil recently accepted an invitation to join the Organization of the Petroleum Exporting Countries (OPEC), despite previous offers during Jair Bolsonaro’s presidency. This decision comes as a surprise considering President Lula’s commitment to positioning Brazil as a key player in climate change discussions.
The international community may take a skeptical view toward Brazil as the country attempts to lead efforts in protecting the Amazon and place itself at the forefront of the fight against climate change effects, aligning itself with the world’s primary intergovernmental alliance of major oil-producing nations. Even at the surface level, it would seem the optimism that accompanied President Lula’s election in 2022 concerning the previously mentioned themes would be antithetical to OPEC’s goals. Yet, the question persists, why would Brazil choose to align itself with OPEC+ now, and what are the potential implications?
On a fundamental level, there appears to be a quid pro quo arrangement, which is typical in international affairs. Saudi Arabia, one of the leading members of the organization, played a substantial role in Brazil’s membership, having extended multiple invitations to the South American giant on previous occasions, both during President Lula’s previous mandate and that of former President Jair Bolsonaro’s mandate. The timing of Brazil’s inclusion in OPEC+ aligns with Saudi Arabia’s confirmation as one of the recent members to join BRICS, further enhancing the influence of this growing intergovernmental organization which already counts established powers such as China in its ranks, as well as emerging powers such as India.
President Lula explained the reason behind the decision to join OPEC+, stating that “ it’s important for us to take part in OPEC+, because we need to convince the countries that produce oil that they need to prepare for the end of fossil fuels”. This statement would be well in line with Brazil’s attempt to position itself as the leader of pushing the green agenda, especially in the Southern Hemisphere, and was made at the recently held COP28 in Dubai.
The Pros and Cons of Brazil’s Membership
However, President Lula’s statement seems to be in direct contradiction to the plans of Petrobras, a Brazilian multinational energy corporation and one of the largest oil and gas companies in Latin America. Jean-Paul Prates, the corporation’s Chief Executive Officer, reiterated that the company would not be subject to any production quotas as a result of Brazil’s status as a non-voting member, and stressed Petrobras’ commitment to its shareholders as a publicly traded company.
Additionally, Petrobras harbours ambitious plans for growth through becoming the third-largest oil-producing company, and Brazil are projected to be the fifth-largest crude oil producing country by 2030. Therefore, it seems that a delicate balancing act lies ahead for future governments in which they will need to maintain Brazil’s commitment to energy transition while transforming itself into a global energy power.
For Brazil, joining OPEC+ presents notable advantages. As a member, Brazil can actively engage in decisions influencing oil production levels, contributing to market stability and optimizing revenue from its oil-dependent economy. OPEC+ membership would grant Brazil access to valuable information on global oil markets, enhancing its ability to make informed decisions and navigate the energy sector effectively.
Moreover, participating in discussions shaping international energy policies positions Brazil as a key player, elevating its political influence in the global energy landscape, which is exactly what President Lula envisioned for the country. However, this is also sure to dent Brazil’s standing among its allies who are also championing the green agenda and sustainable development, namely the European Union. In addition, most OPEC and OPEC+ countries, such as Libya, the United Arab Emirates, and Russia, are not viewed favorably in the global arena for their human rights records and autocratic governments.
In all, only the test of time will be able to tell whether Brazil made the correct decision in joining OPEC+, and various countries will be keeping an eye as the effects unfold.
Questions to consider:
- What are the motivating factors behind Brazil’s decision to finally join OPEC, albeit as a non-voting member?
- Does the decision to join OPEC+ hurt Brazil’s image as one of the foremost countries championing the climate agenda?
- How will the Brazilian government balance its national interests with its obligations as a member of OPEC+?
Suggested further readings:
https://www.ft.com/content/76a1ccb0-8534-4513-8fb5-5eb5e07773bd
