OPEC appears poised to extend oil production cuts at it's May meeting, yet the 13 member oil producing cartel seems destined to face a crossroads in which it will be made to choose between preserving a price floor or protecting market share, according to a senior economist.
"OPEC's output cuts will most probably be extended at the May 25 meeting, yet things do not look so rosy for the cartel beyond the near term," Konstantinos Venetis, senior economist at research firm TS Lombard, said in an email.
"Come 2018 OPEC members will be hard pressed to choose between maintaining a price floor and protecting market share, unless global demand is surprisingly brisk," he added.
OPEC and non-OPEC producers are widely expected to announce an extension to cuts in oil output in a meeting on May 25. The group seems well positioned to continue with its attempts to eliminate a global supply overhang which has depressed prices to less than half their 2014 high.
OPEC, Russia and other oil producing nations had agreed to curtail oil production by 1.8 million barrels per day (b/d) for six months, from January 1.
OPEC Secretary General Mohammad Sanusi Barkindo admitted to CNBC in April that the group's "credibility" was at stake ahead of the meeting.
Since the implementation of the landmark deal oil prices have soared by around 19 percent.
However, stockpiles remain strong and production from non-participating countries, including the U.S., has been rising, capping crude some way below the $60 a level earmarked by OPEC's de-facto leader, Saudi Arabia.
With just over a fortnight until the much anticipated OPEC meeting, Brent crude traded at around $49.23 a barrel on Tuesday, down 0.18 percent, while U.S. crude was around $46.33 a barrel, down 0.26 percent in early afternoon deals.