New Saudi Energy Minister Shows He Takes OPEC Seriously

New Saudi Energy Minister Shows He Takes OPEC Seriously
Saudi Arabia's new energy minister shows signs that he is taking OPEC seriously.

Reuters

VIENNA, May 31 (Reuters) - For OPEC watchers, every little detail matters.

When the oil producer group holds its half-yearly meetings, what time the ministers arrive in Vienna, how they speak and which hotel they stay in - anything will be analysed in an attempt to predict its policies.

So it was seen as a sign that new Saudi Energy Minister Khalid al-Falih takes OPEC seriously when he turned up in the Austrian capital on Monday, three days before the Organization of the Petroleum Exporting Countries' upcoming discussions.

But Falih will have little opportunity to see fellow ministers ahead of Thursday's meeting. Many of them, including those from Iran and Venezuela, won't show up in Vienna until midday or even late on Wednesday.

For veteran OPEC watcher Gary Ross, founder of New York-based consultancy PIRA, that signals expectations should be low as far as OPEC policy is concerned.

"These guys are not exactly getting along these days," Ross said. "OPEC is becoming far less important. We are entering an era when market management will be non-existent".

OPEC last decided to change output in December 2008, when it cut supply amid slowing demand due to a global financial crisis. By contrast, between 1998 and 2008, OPEC made 27 changes to output.

For decades, Saudi Arabia, Vienna-based OPEC's largest producer and de facto leader, had a preferred range for oil prices and, if unhappy, would try to orchestrate a group-wide production cut or increase.

But a technology-driven spike in non-OPEC output such as that of U.S. shale and growing fuel efficiency led Riyadh to conclude that the era of fast oil growth might be ending.

In the past two years, Riyadh has stuck to a strategy of fighting for market share, thinking that pumping more oil now at low prices is better than producing less in the future.

"We think continuity will carry the day at the June OPEC meeting in Vienna. The only real uncertainty is how divisive the meeting will be and how much discord will be put on public display," said Helima Croft, head of commodity strategy at RBC Capital Markets.

FIGHT FOR SHARE

Unlike his predecessor, Saudi oil minister Ali al-Naimi, Falih has a much larger portfolio overseeing energy, industry, mining, atomic power and renewables.

On Tuesday, Falih visited OPEC headquarters to meet Secretary-General Abdullah al-Badri, staying for 90 minutes in a clear display that despite being a busy man, he has time for the producer group.


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