OPEC puts its best face forward

March 16, 2009

The headline that emerged from nearly five hours of weekend talks by the producers’ club OPEC was that it that had decided to leave its output policy unchanged. But you shouldn’t believe everything you read in the press.
OPEC http://www.opec.org/home/cited the fragile state of the world economy and said it was doing its bit to try to nurse the economy back to health by avoiding any aggressive cuts in oil supply.
As far as the wider world could tell, the group, which supplies more than a third of the world’s oil, was united in its concern for its hard-pressed customers, especially the biggest one of all, the United States whose new leader is far more palatable as far as OPEC is concerned than his predecessor.
In reality, the closed-door debate inside OPEC’s scruffy Vienna secretariat on the banks of the Danube Canal, which feeds into the more romantic Danube River, was rather more heated than we were led to believe.
Languishing oil prices and ballooning oil stocks are more worrying for some members of OPEC than others and those most concerned about balancing their books were said to be holding out for radical action to try to drive up the oil market.
Delegates circulating in the lobbies of Vienna’s elegant hotels whispered that far from a straightforward consensus, some members had battled for a supply reduction of anything up to 1.5 million barrels per day.
Kuwait, whose government offered to resign en masse on Monday, and Iran, which faces expensive presidential elections in June, were among those keenest to prop up prices that have fallen by more than $100 from last year’s record high, the delegates said.
But intent on presenting a unified front, ministers chose not to tell the line of reporters waiting outside the meeting about any internal divisions.
The version for the media’s eyes and ears was that a new administration in the world’s biggest energy consumer made it so much easier to bury old enmities and agree with U.S. ally and leading oil exporter Saudi Arabia that for now the best output policy is one that doesn’t send oil prices soaring.

Comments

The meeting lasted 6 hours so obviously there was some serious discussion on how to proceed. In the end, in my opinion, the question came down to whether or not Saudi Arabia was willing to take the lead in further cuts and the answer was negative.

Posted by mplatt | Report as abusive
 

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