IT was one of the worst Opec meetings ever,” exclaimed the most important man in world oil, Ali al-Naimi, back in June to a gob-smacked press pack in Vienna.
Seriously, this was a truly amazing utterance from a man who, despite his enormous power, likes to let others do the talking at Opec meetings.
Fast forward to this week and the question is whether Opec will get its composure back for a united front?
I’m guessing I’ve been to between 15 to 20 Opec gatherings, but this was the first time the Saudi Oil minister had ever lost his cool so badly that it showed to the outside world. Time after time I’ve thrust a microphone into his face amid the extraordinary media scrum at these Vienna meetings only to find him smiling widely but saying little.
You see, last time round Saudi Arabia didn’t get its way. It didn’t get the other members of the group that controls around 40 per cent of the world’s oil production to toe the line.
Saudi had wanted to show the world that it heard their concerns about what $100 plus per barrel oil was doing to key customers. It wanted to show that it was working “with” rather than “against” its customers in China, the US and Europe.
In June, Saudi, then backed by its Gulf Co-Operation Council partners, announced it would produce extra oil anyway, whatever Iran and Venezuela may think.
So what happens this time round at the Opec meeting this Wednesday, 14 December? Well, in truth, not a lot will happen to real production levels. Opec last officially changed production levels in January 2009 but has of course since then upped production every time the Chinese and others have needed it. Despite grave concerns over the loss of Libyan oil earlier this year, global producers found the extra inventory when it was needed.
What is amazing is the stability of the oil market despite all that is being thrown at it. Brent at circa $110 per barrel and WTI (West Texas Intermediate) $10 cheaper seems to be the new equilibrium. And that despite arguments from the bulls over Iranian oil embargoes, emerging market demand growth and further Middle Eastern Arab uprisings. And from the bear side, fears over a fall in demand that a Western recession could create, a wave of new “tight oil” coming on to the US energy market and more product becoming available through technological advances.
Al-Naimi gets pretty angry when reporters call Opec a “cartel”. But despite his disdain at the word, it will surely make him happy this week if the major oil producers of Opec are singing from the same hymn sheet.
Steve Sedgwick, Anchor, CNBC