With oil prices at a one-year low, OPEC is facing an unusually fraught meeting in Vienna
If you thought the conversation around your dinner table on Thanksgiving was awkward, imagine the tension between major oil exporters next week in Vienna.
It was only back in June that Uncle Mohammed and his new friend Vladimir, watching their teams play one another in the World Cup in Moscow, agreed to an early end to a deal that had brought oil prices back from the abyss.
Now that they have dropped by nearly a third since early October to their lowest level in a year, the far-more-difficult decision to trim output and support the market is proving thorny. The Saudis announced they would unilaterally cut output by half a million barrels, only to be undercut by their Russian counterpart.
And imagine how Cousin Hassan, the black sheep of the family, will feel when he flies all the way from Tehran only to get the smallest piece of pie. Iranian output is down by approximately half a million barrels from its pre-sanctions peak in the spring.
Yet Mohammed is, perhaps with some justification, sore at his American pal Donald for granting waivers that allow big buyers like India and China to keep buying lots of Hassan’s oil. That decision before U.S. midterm elections—more than hints of a global economic slowdown—is responsible for the recent price rout.
Meanwhile, although Donald is still a net importer, his compatriot producers are pumping with abandon and are bound to flood the market come mid-2019. Mohammed can’t complain too loudly, though, given how Donald has had his back in the unpleasantness over that murdered journalist.
At least everyone should have the decency not to bring that up at the table—the meeting is all about business.