It's been a year, since OPEC — in a constantly altering market outlook — opted to fight out. Much has happened since then. Oil markets are in pain. None can argue that. Prices have fallen from $115 a barrel in the summer of 2014 to under $45. And if some experts are to be believed, the prospect of $30 can no longer be written off. Another OPEC ministerial meeting is just round the corner. And all eyes are focused on it. OPEC's next move on the global energy chessboard is being awaited — eagerly. The world is curious. The curiosity went up a notch, when Saudi Arabia hinted repeatedly, it would be ready to help stabilize the markets — in cooperation with the other players. Speaking at the seminar on Future of Energy in Bahrain, Minister of Petroleum and Mineral Resources Ali Al-Naimi noted that "Perhaps it would be fitting here to mention the role of the Kingdom of Saudi Arabia in the stability of the oil market, and its continued willingness and prompt, assiduous efforts to cooperate with all oil producing and exporting countries, both from within and outside OPEC, in order to maintain market and price stability." The minister's comments were supported during a subsequent Saudi Cabinet meeting too. "The Cabinet stressed the Kingdom's role in the stability of the oil market, its constant readiness and continuing pursuit to cooperate with all oil producing and exporting countries." Assistant Minister of Petroleum and Mineral Resources Prince Abdulaziz Bin Salman, while addressing the 6th Asian Ministerial Energy Roundtable, earlier in the month in Doha, Qatar, too had stressed that Saudi Arabia will continue to, proactively, pursue the stability of the petroleum markets. All these statements prompted widespread speculations — all around. Some took the Saudi declaration, of the will and desire to stabilize the oil markets, as an indication of the country's preparedness to agree to cutting the OPEC output, when the group meets next week. Markets in fact surged last Monday on Saudi Arabia's remarks, before reverting to normal, as the euphoria subsided. Pundits today appear divided, on the next OPEC move. Phillip Futures energy analyst Daniel Ang was quoted by WSJ as asserting that despite reports that Saudi Arabia signaling its willingness to work with other producers to stabilize the market, the meeting will largely be a "non-event" unless other, major oil leaders, too make concrete commitments. "Unless non-OPEC say they are willing to help, I think there will be no change," Reuters quoted an OPEC delegate as saying. "OPEC will not cut alone." Indeed, Russia may attend informal consultations with OPEC before the Vienna meeting but there is little likelihood Moscow will change its stance and work with OPEC on cutting output, sources added. "At present, I can't see any indication that Saudi Arabia will seek to alter its market-share oriented strategy," said David Fyfe, head of research at trading firm Gunvor. "The resilience of the strategy will be tested over the next 12-18 months by any production increases that emerge from Iran, Iraq and Libya." Barnabas Gan, an economist at OCBC, expects OPEC to ramp up its daily production from roughly around 31 million barrels a day to 33 million barrels a day, as the strategy of inundating the market with supplies to defend its market share and squeeze out lesser competitors seems to be working. US production of shale has seen a gradual decline and the number of active oil rigs in North America has also tapered off in recent weeks and months. "From a fundamental point of view, an increase in OPEC's production quota is much required; Indonesia's inclusion into the cartel will add roughly 800,000 barrels a day into the overall production pipeline, giving OPEC the perfect excuse to propose a higher quota," added Gan. Moreover, OPEC will need to account for potentially higher oil production from Iran and Libya as well, he added. Brian Youngberg, senior energy analyst at Edward Jones, told MarketWatch, not to expect much changes. "Saudi Arabia will say no change," and "Iran will reiterate its plans to bring production up in 2016 regardless of what OPEC says to do," he underlined. Katrina Lamb, head of investment strategy and research at MV Financial Lamb doesn't expect any of the calls for action to lead to a revision of OPEC's current production target policies. "Saudi Arabia remains focused on increasing market share in key markets, especially Asian markets, and more likely than not will continue to back the hands-off policies articulated at last year's OPEC meeting," Lamb told MarketWatch. "OPEC is convinced that the strategy chosen a year ago to let supply and demand decide where the oil prices should be is the correct one," felt Philipp Chladek, energy analyst at Bloomberg Intelligence. "The situation OPEC has to deal with now, which is the rise of shale oil, is mostly likely not a temporary shock, but a lasting one," he said. "So there is little OPEC can do about this other than trying to nudge the highest-cost producers out of the market by keeping prices as low as possible." News from the OPEC meeting thus may include more cooperation with Russia and Indonesia's return as an OPEC member, but those don't really have market-moving potential, Chladek added. Even in the unlikely event that the cartel decides to make a change to its output ceiling at the meeting, the move might actually lean more toward an increase rather than a decrease. The official quota may be raised from 30 million barrels a day to 31 million, said Chladek. "They are already producing more than that now. It won't make that much of a difference." "They're not going to do anything," believes Edward Morse, head of global commodities research at Citigroup. Morse said he expects some OPEC members like Venezuela pleading to cut output. However, he added: "It's unlikely they're going to get a joint decision anytime soon involving a production cut that includes Iraq, Iran and Venezuela, let alone Libya." Iran remains a particular challenge for OPEC, since it has vowed to return to production as soon as it can, under an international agreement to end its nuclear program. "Iranians want to raise production." Could that wish be accommodated in the current scenario? "It's really a nonstarter," said Greg Priddy, director of global energy and natural resources at the Eurasia Group. "I don't think there's a commonality of interest," he added. OPEC members continue to have divergent views. In the light of all this, it seems the bets are out: don't expect a ‘U-turn' — at the upcoming ministerial — as far as the output policy is concerned. Fingers stay crossed!
