OPEC ministers face one of their toughest challenges in recent memory as they prepare to meet in Vienna in an emergency session with the global financial swirling around them and clouding the future of demand for their oil.
Judging by remarks in the days leading up to the meeting, which was brought forward from November 18 as oil prices tanked, the majority of the 13-member group are in favor of a production cut to lift oil prices, which have slumped further as fears of lower demand for energy appeared to override any fear of a cut in oil supply by the cartel.
But the big question mark with just two days to go before the meeting is Saudi Arabia's position. As OPEC's biggest oil producer and exporter and the country with nearly all the world's spare production capacity, the kingdom holds the ace and most of the other winning cards as well.
Riyadh has not made its position public, preferring, as usual, to remain silent as to its intentions. However, if an interview in the well-informed newspaper al-Hayat is any indication, the kingdom may balk at a deep cut in oil production while the world contemplates the possibility of an economic recession.
Saudi Arabia is keenly aware that any wrong move would have, in the very least, a negative psychological impact on the global market and would leave a bitter taste in the mouths of consumers that the producers' club might ultimately pay for as consumers switch to other sources of energy.
Ali Naimi, the long-serving Saudi Arabian oil minister, will no doubt still remember when he pressed for a production increase in 1988, just before the Asian economic downturn hammered demand and sent prices crashing below $10/barrel. With oil prices now hovering in a range of $65-$70/barrel, Naimi may well prefer to sit back and let the market adjust to lower demand rather than administer shock treatment through a supply cut.
The big question is the price at which OPEC will feel that it must act or risk sending the oil-dependent economies of its members into deficit after several years of record surpluses. OPEC has no group price target though the OPEC president, Chakib Khelil, Iranian oil minister Gholamhossein Nozari and Qatar's Abdullah al-Attiyah appear to see a price somewhere between $70 and $90/barrel as acceptable.
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