Traders momentarily pushed oil prices back over $50 a barrel this morning (June 2), betting that OPEC, now meeting in Vienna, would dispel the growing belief that the once-mighty cartel has become largely irrelevant. At 4:53 AM EST, the West Texas Intermediate crude oil futures for July delivery were trading at $49.20 per barrel-a gain of 0.39%.
Advertisement
“We will be very gentle in our approach and make sure we don’t shock the market in any way”, Al-Falih told reporters.
The Organization of the Petroleum Exporting Countries last made a decision to change output in December 2008, and for oil-price hawks such as Iran, fears are growing that the 56-year-old OPEC is losing its role as a production-setting cartel and turning into a talking shop.
Some analysts see risks that oil prices could again pull back.
OPEC is an worldwide organization founded by oil exporting nations Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, on September 10, 1960, in Baghdad, Iraq, for the goal of coordinating their crude oil market share.
While some such as Kuwait and Qatar appeared to lean towards the Saudi Arabian way of thinking – agreeing on the need for an output ceiling – others such as Venezuela and Algeria seemed to agree with Iran, which said an output ceiling must be accompanied by a country-specific quota system.
Saudi Arabia meanwhile is undergoing change with the powerful young Deputy Crown Prince Mohammed bin Salman seeking to revamp the country’s economy to reduce dependence on oil. However, a move to freeze output is likely to meet with opposition from Iran.
“Without country quotas, Opec can not control anything”, Zanganeh told reporters.
At its previous meeting in December 2015, Opec effectively allowed its 13 members to pump at will. For most of the time since the 1970s, the cartel has driven fear and dread around the world with its power to push up oil prices.
As a result, prices crashed to $27 per barrel in January, their lowest in over a decade, but have since recovered to around $50 due to global supply outages.
Advertisement
In the meantime, the most anticipated event at this week’s meeting will be the appearance of Saudi Arabia’s new energy minister, Khalid al-Falih, at his first meeting of the cartel.
