The lengthy and still unresolved negotiations with Iran should serve as a template for this week’s OPEC meeting, a confluence of countries with different objectives trying to put the best face on the failure to reach a meaningful agreement. On the other hand, the latter meeting will be much less important for the long-term though not necessarily the short-term.
Oil prices dropped $30 from late June to late October, but have been relatively stable since, partly because of better economic news in the US, and partly the perception that $80 is roughly where the Saudis want the price to be, even though they have remained typically sphinx-like. In times past, prices sometimes stabilized before a meeting, discouraging the group from action, which led to a post-meeting fall
Other members are more willing to express their opinions, usually about how "low" oil prices are, ignoring the fact that they have rarely been as high as they continue to be. (Like most industries, people in oil nearly always think that prices should be higher than they are; this holds for most governments that rely on oil revenues.)
Some of the smaller, more desperate members like Venezuela will offer to cut production as part of a quota agreement, while others will push for the Saudis, in particular, to carry the lion’s share of the burden. There will also be calls for non-members like Oman, Norway and Mexico to once again cooperate, but since none of those has contributed to the current production increase, they are unlikely to be interested. Russia (meaning Putin), however, might consider this an opportunity to demonstrate its power in the face of economic sanctions and offer some assistance, but only in the context of a wider agreement.
Background to all this, the enhanced stimulus efforts being promoted in Asia and Europe, combined with the improving US economy (massive sandbag sales in Buffalo!), should stabilize prices even if there is no meaningful action by OPEC. Of course, the judgment that matters is those of the traders, at least in the short term, and their reaction is always unpredictable.
My predictions:
First day, ministers will emerge from the meeting and admit there is ample disagreement. They will also call on non-OPEC producers to contribute to the effort, receiving silence in response.
Over two thousand stories will appear on the internet on the subject "Does OPEC still matter?" Answer, "sort of."
Second day, agreement will be announced calling for better adherence to quotas and consultations if prices drop further. Gulf producers will express satisfaction while others indicate glum acceptance.
Reporters will file numerous stories about how vital the meeting is and how their editors should continue sending them to Vienna with hefty expense accounts. (Oil is a strategic commodity, but alcohol remains a vital lubricant.)
