The spotlight was back on Vienna this week as OPEC held its 7th International Seminar and its mid-year meeting.
Ministers had to contend with a long list of concerns that came together in time for this mid-year gathering.
In Friday trading, Brent crude was priced around US$75 with WTI holding above US$68 a barrel.
More barrels..
Adding more barrels to the market was necessary in response to rising prices and requests from major consuming countries, but OPEC resisted giving a number, saying the 100 percent conformity would automatically deliver the solution.
The Saudi Arabian oil minister Khalid Al Falih had called for an increase of a million barrels, but different analysts say that taking into account individual countries ability to deliver, the addition could be anything from 600,000 to 800,000 barrels a day back on the market.
Earlier in the week, the Indian oil minister Dharmendra Pradhan spoke at the OPEC Seminar and reminded the ministers that high oil prices were hurting his economy. Similar calls from Russia, the US and China were also clear and OPEC responded.
Stock overhang..
Over the past 18 month lifetime of the agreement, the conformity levels exceeded expectations and helped to rebalance the huge stock overhang that saw a surplus of supply on the market.
Industry analysts and energy leaders all claimed the Declaration of Cooperation was a huge success, but markets began to tighten in recent months and the price was in danger of building further strength.
Pressed by journalists to give a figure and a breakdown of the oil increase, the OPEC President and UAE Energy Minister, Suhail Al Mazrouei said: "I think the fact that we dealt with the over-compliance in a very professional manner, as a collective group, not individual countries, leaving our own interests aside and looking after the interests of the market.”
Analysts agree this decision shows strength. Speaking after the meeting, Cornelia Meyer of MRL Corporation said: "What happens to emerging markets will have an impact on markets, so having a mechanism of cooperation in place is useful so we can respond quickly.”
Ministers arrived in Vienna earlier in the week facing headlines of disarray and internal disputes.
Saudi Arabia’s Al Falih spent the early days in bi-lateral meetings building consensus and support for the oil increase. The Iranian Minister of Petroleum, Bijan Namdar Zangeneh was feeling too much pressure from the US earlier in the week, but he was clearly brought back to the fold.
Stability to market..
Analysts agree the unity demonstrated by OPEC has built confidence from the market. The head of commodity strategy at RBC Capital Markets, Helima Croft added, “it’s very important that the wider group stays together, they worked together well and the market will take comfort knowing they will act as a regulator so we’re not oversupplied or undersupplied; it brings stability to the market.”
Clearly watching progress from afar, the press confidence had just concluded when President Trump issued a tweet, “hope OPEC will increase output substantially. Need to keep prices down.”
No doubt he’ll be counting the barrels back on the market in weeks to come.
While widening the non-Opec support, the core OPEC membership just got stronger at this 174th meeting of the conference, admitting Congo as its 15th full member.
The next meeting of the OPEC conference will be December 3rd in Vienna with promises of vigilant discipline in the meantime.