OPEC member ministers will meet in Vienna next week to decide on whether to extend an older output cutback agreement involving themselves as well as non-member countries, including Russia.
With the price of crude currently up to nearly 63 dollars a barrel, a two-year high, it could certainly be said that the agreement has delivered as intended, even if with considerable delay.
Ending the agreement would definitely prompt a crude oil price collapse to levels of around 50 dollars now that the market has grown accustomed to the output cutback measure.
Given this factor, it could be presumed that the price-supporting agreement will be extended. Even so, rumors have spread that certain OPEC members and Russia want the measure lifted in March, or, alternatively, are demanding a schedule specifying its end.
The steadly flow of contact between OPEC member ministers in recent months, via a virtual chatroom, has now stopped, according to a Reuters report published yesterday. Instead, cartel members are reassessing their positions individually, the report informed.
The intensified geopolitical rivalry between Saudi Arabia and Iran, which has resulted following the latest developments in Lebanon and Yemen, is a divisive factor that threatens to undermine the level of cooperation within OPEC. So, too, is Qatar’s rift with Saudi Arabia and the United Arab Emirates.
Such factors will make it more difficult for members to cooperate on next week’s crucial decision. Disagreements between OPEC members have existed in the past, but a breakdown in communications ahead of a crucial meeting is unprecedented, as was pointed out in the Reuters article.