OPEC Summit: Will there be stability?

30.11.2016
Austria

On November 30th, OPEC members will meet in Vienna to discuss the details of the agreement reached in early autumn on reducing oil production.

The agreement

In September, OPEC’s member states agreed to reduce the cartel's oil production to the level of 32.5-33 million barrels per day. In 2016, the countries increased their production volumes to record levels which, among other things, also influenced the decline in energy prices. Some experts attribute this decision to the success of the Russian VKS cartel in Syria and the plight of Riyadh in the Yemeni conflict.

Moscow - Riyadh

The position of Riyadh on this question is very important, as Saudi Arabia plays a significant role in the activities of OPEC. Last week, Saudi Arabia announced its support for the reduction of production and its plans to persuade other countries that were not part of OPEC to remove almost 2% of the world supply from the market. This should also contribute to the rise in oil prices. However, afterwards, mass media reported that Saudi Arabia had no plans to meet separately with Russia, which is not a member of the cartel. Nevertheless, cooperation with Moscow is considered to be a key issue in reducing production.

Forecast

Some experts point out that the rejection of the meeting revealed the differences within the cartel. Analysts think that such a nervous and uncertain situation will affect the market. However, if the decision is taken, there is no guarantee that the countries will be sure to comply with the terms of this agreement. In addition, the term of the agreement is only 6 months. Therefore, by the second half of 2017, the situation could once again spiral out of control. In any case, a large number of countries are interested in the stabilization of the market. Thus, it is possible that a number of measures will be adopted at the highest political level in 2017 in order to stop the volatility. Moreover, both Russian President Vladimir Putin and US President-elect Donald Trump will be for this agreement. Given their massive influence, they could affect the decisions of third countries. 

Related links
OPEC is ready to increase oil prices
OPEC meeting in Vienna
Petropolitics: two poles of OPEC
OPEC
Vienna
Oil
Talks