A twenty-five percent plunge in oil prices might seem to make curbing the supply of crude a no-brainer for the world’s oil producers.
And yet it looks increasingly possible that the 161st ordinary meeting of the Organization of Petroleum Exporting Countries, or OPEC, in Vienna this week could end in a virtual stalemate. The meeting, slated to begin Thursday afternoon local time, could even be a repeat of last June’s at which no communique, or statement, was issued as no agreement as to output levels at the time could be made.
Already, sources in Vienna are speculating that this year’s meeting could last into Friday. The internal politics which have long plagued OPEC threaten to become a wider rift as member nations, including Saudi Arabia, continue to produce oil at levels above the 30 million barrel per day ceiling they agreed to in December.
Venezuela, for one, has already expressed its displeasure and there are indications it will press not just for compliance with the 30-million-barrel level but with an even lower ceiling at this week’s meeting to help stem the rapid recent drop in oil prices. Saudi Arabia, the juggernaut in terms of output and influence, meanwhile seems to prefer to keep output at roughly current levels of 31.6 million barrels per day as of May. It has some justification in that it is working to offset a continued decline in Iranian crude output that will fall even more sharply come July 1 when European Union sanctions go into force.
Indeed, the Saudi oil minister, Ali al-Naimi, said in an interview with the Gulf Oil Review just before the meeting this week that "Our analysis suggests that we will need a higher ceiling than currently exists." He appeared to backpedal from that statement upon arrival in Vienna on Monday evening, however, telling reporters only that “maybe” the ceiling would be raised.