The prospects for an emergency OPEC meeting to initiate coordinated production cuts took a hit this weekend. Venezuela’s oil minister Eulogio del Pino flew to Riyadh to meet with Saudi officials, which followed a recent trip to Moscow to gin up support from Russia for their cooperation. Venezuela has sent a formal request to OPEC for an emergency meeting, and del Pino has been conducting some shuttle diplomacy to build support to stabilize oil prices.
However, after meeting with Saudi Arabia’s oil minister Ali al-Naimi, a very powerful voice in forming OPEC strategy, the meeting adjourned with no agreement. Although al-Naimi said that the meeting was “successful” and had a “positive atmosphere,” the comments were noticeably lacking any mention of an agreed upon strategy or even a confirmation that an emergency meeting would take place. “Nothing really happened at the meeting,” an OPEC official told The Wall Street Journal. Related: Despite Huge Losses Oil Companies Reluctant To Shut In Production
That will likely deflate some of the hopes that OPEC would cut production, a possibility that was largely responsible for a brief but sudden rally in oil prices at the end of January. Speculation grew as several major oil producers, including Russia, Iraq, and Iran, gave varying degrees of support for an emergency meeting, all with the caveat that other top oil producers would have to go along for them to do so.
Along with a tepid jobs report in the U.S. on February 5 and persistent oversupply in the oil markets, the relatively uneventful meeting in Riyadh will drag down oil prices to start the week. On Monday morning, WTI was off by 2.5 percent to $30 per barrel, and Brent dropped to $33.50 per barrel, or a 1.6 percent decline.
By Charles Kennedy of Oilprice.com
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