The Organization of Petroleum Exporting Countries (OPEC) went ahead to glut the market with even more oil after it failed to reach a production freeze agreement in April.
In a note to clients on Sunday, Barclays commodities researchers wrote that, led by Gulf States, the cartel of oil producers has increased its output by 500,000 barrels per day since the meeting in Doha.
OPEC is meeting again this week to try and solve the excess supply that helped drive oil prices to the lowest level since 2003 earlier this year.
The much-hyped informal meeting in Doha in April ended without an agreement to cap production after Saudi Arabia declined to participate without the involvement of Iran, its geopolitical rival. The formal meeting in Vienna in June also ended without a deal.
Barclays’ Warren Russell and his team anticipate that when OPEC members meet on the sidelines of the International Energy Forum this week, they’ll reach the same outcome.
From the note:
“Do not forget the real impetus of the upcoming producer meeting in Algiers: a ministerial level meeting of the International Energy Forum (“IEF”), a forum for open dialogue, and information sharing among energy-producing and consuming nations. The Riyadh-based IEF supports the Joint Oil Data Initiative and its transparency mandate has received a boost with the recent Saudi-supported nomination of a Chinese official to head the organization.
Thus, key IEF members, such as Saudi Arabia and OPEC secretary general Barkindo, are ensuring that the much-touted OPEC/non-OPEC producer meeting does not overshadow the IEF meeting.”
Russell wrote that unlike the Doha meeting, OPEC members will commit to monitoring the market and meeting again if conditions change.
Business Insider’s Elena Holodny noted in her full preview of the meeting that OPEC members still hold political grudges and have long-run strategic interests that could keep them divided for now.