Pragmatic or simply bored? Saudi Arabia wants less OPEC meetings
Saudi Arabia has suggested OPEC meet just once a year, rather than twice, a sharp reduction from the days when the group met for up to seven times a year in the early 2000s.
The OPEC meetings since 2012 have produced no policy change and Wednesday’s gathering in Vienna was no exception, sticking with its production target of 30 million barrels per day (bpd).
The 12-member cartel used to give traders more to worry about, meeting several times a year, convening emergency meetings at short notice and sometimes making surprise decisions as it tried to micro-manage the oil market.
But with the biggest consumer, the United States, experiencing an oil boom and prices comfortably anchored around $110 a barrel, OPEC meetings have dropped down the list of supply risks for oil traders.
Top OPEC producer Saudi Arabia suggested in the meeting on Wednesday that OPEC met just once a year, three OPEC delegates said, but other countries rejected the idea and the next gathering is scheduled for Nov. 27.
“The meetings are quiet and there is nothing much to discuss except for the issue of the secretary general,” said a delegate. “But it can’t be changed as internal policy says OPEC has to meet twice a year.”
The delegate was referring to OPEC’s Statute, which says the group shall hold two ordinary meetings a year, and its long-running deadlock over who should succeed Abdullah al-Badri as OPEC’s secretary-general.
The unchanged 30 million bpd output target leaves the door open for Saudi Arabia to tweak output unofficially depending on demand or in response to supply outages in other producer countries.
Saudi Arabia holds most of OPEC’s idle production capacity and its Gulf allies the United Arab Emirates and Kuwait smaller amounts, giving them more influence. Most other OPEC members cannot raise output and outages in Libya, Nigeria, Iraq and Iran have cut their supply.
Since January 2012, OPEC’s actual production month-by-month has fallen below 30 million bpd and risen as high as 31.75 million bpd, according to Reuters estimates.
At this week’s talks, Saudi Oil Minister Ali al-Naimi arrived later than usual on the morning of the meeting and, with prices comfortably above Saudi Arabia’s preferred level of $100 a barrel, stressed he was happy with the market.