WASHINGTON (Sputnik) — Members of OPEC will convene in Vienna, Austria on Thursday to discuss a plan to freeze oil production, two months after the previous attempt failed amid Saudi Arabia’s reversal.
"There’s not going to be any [oil output] agreement," Tradition Energy Senior Analyst Gene McGillian told Sputnik on Tuesday. "It’s pretty clear that the Saudis want to produce as much oil as they can to maintain their new policy… the idea that they want to keep their market share."
Saudi Arabia’s strategy, McGillian noted, is partly being driven by Iran’s goal to ramp up production to pre-sanctions levels, although Tehran is drawing closer to that mark.
"The drop in US production levels to… about 8.7 million barrels is probably a pretty good indicator that they were right," McGillian noted.
The recent crude oil rally from $30 to $50 a barrel, McGillian argued, is largely due to forward expectations about declining North American production levels, but questions loom over whether this means oil supply will "tighten" in the long run.
"What we are going to find out in the next couple months is whether that fundamental [supply] picture has tightened and this rally is justified or… [if] we still have a glut on our hands," McGillian suggested.
Brown University Professor Jeff Colgan told Sputnik that he expects very little to come out of Thursday’s OPEC summit in Vienna.
"OPEC is unlikely to come to any agreement to change the status quo, and even if they do, it’s very doubtful it will be enforced," Colgan stated.
The big news ahead of the summit, Colgan added, is that Saudi Arabia has a new oil minister and this is his first meeting, although it will not affect the outcome.
The OPEC meeting is being held against a background of steadily reviving oil prices, which hit $50 a barrel on Tuesday, despite Saudi Arabia’s efforts to drive global prices down by dramatically expanding its own production.
