OPEC is determined to keep pumping oil vigorously despite the resulting financial strain even on the policy's chief architect, Saudi Arabia, alarming weaker members who fear prices may slump further towards $20. Any policy U-turn would be possible only if large producers outside the exporters' group, notably Russia, were to join coordinated output cuts. While Moscow may consult OPEC oil ministers before their six-monthly meeting next week, the chances of it helping to halt the price slide remain slim. "Unless non-OPEC say they are willing to help, I think there will be no change," said a delegate from a major OPEC producer. "OPEC will not cut alone."
When the exporters' group last met in Vienna in June, Saudi oil minister Ali al-Naimi and those from other wealthy Gulf states could barely hide their jubilation.
OPEC's historic decision in November 2014 - to pump more oil and defend its market share against surging rival suppliers - was working, they proclaimed as crude traded near $65 per barrel. Six months later, it has hit $45, down from as much as $115 in the middle of last year. Now some member states are talking about a return to twenty-dollar-oil, last seen at the turn of the millennium. They point to Iranian confidence that international sanctions on its economy will be lifted by the end of the year.
"Iran is announcing its production is going to increase as soon as they lift the sanctions and we need to do something. We (OPEC) cannot allow going into a war of prices. We need to stabilise the market," Venezuelan oil minister Eulogio del Pino said on Sunday. Asked how low prices could go next year if OPEC failed to change course, he said: "Mid-20s."
Goldman Sachs said this year it saw a possibility of crude going even below $20 because of the huge global oversupply, a strong dollar and a slowing Chinese economy. Most analysts doubt the Iranian sanctions will be lifted before next spring under its nuclear deal with world powers, but sooner or later its output will rise.
About the author
Research Associate at Center for Islam and Global Affairs (CIGA) at Istanbul Sabahattin Zaim University