A November 28 meeting between OPEC producers and those oil-based countries not in the organization was cancelled after Saudi Arabia indicated it wouldn’t be attending. The discussions in Vienna were meant to find common ground in forging strategies that will help limit the supply of oil in order to boost the commodity’s price.
The reason that Saudi Arabia chose to skip the meetings was a simple one, related to the inability of OPEC itself to find common ground on the right strategy. After holding out for the past two years and actually increasing production, the hard economic reality of budget woes have forced the Kingdom into pushing for cuts.
However, countries such as Iran continue to favor maintaining the same or higher levels of production in an order to bring in revenue. The Iranians only recently emerged from years of punishing economic sanctions, which means priming the pump of their main financial asset, even if it’s been depleted in value.
In addition, Iraq continues to emerge from the dark days of war and seeks to rebuild from the conflict that began in 2003. As a result, they’ve asked to be exempted from any such agreement.
Back in September, OPEC nations tentatively agreed to cuts that would limit production to anywhere from 32.5 to 33 million barrels each day. That was the first time in eight years that cuts had been agreed upon, the previous effort coming after the worldwide economic slide.
In October, some internal conflict among OPEC nations again surfaced. The November 30 meeting that was scheduled after no consensus was reached will once again try to nail down a plan that can then be taken to the non-OPEC countries. The last time those non-OPEC countries agreed to any cuts was over 15 years ago.