After the Lord Mayor’s show

Front-month crude futures slumped a little further into despond today, following on from the sharper drop on 4 December and looking to challenge the multi-year low of August after Opec ministers resolved to do… nothing.

Nothing, nada, mafish — not reiterate the fictional 30mn b/d production ceiling; not put lipstick on the pig by adding 850,000 b/d for Indonesia; certainly not piously resolve to cut 1mn b/d or generously add 1.5mn b/d from any base. The final statement contained no number — real, imaginary, or aspirational. On probing, Opec president Emmanuel Ibe Kachikwu said, “If you want to put a number on it, it is the current production number.” The more practised secretary-general Abdullah al-Badri managed to be even more circumspect, saying the group “cannot put a number now” on an agreed production level as “Iran is coming — we do not know when Iran will come — we have to accommodate Iran one way or another”.

So who left Vienna vindicated and who went home with a headache?

The Saudis got their way. The market-share strategy continues and more distance has been put between Opec and the 30mn b/d embarrassment just by dint of not mentioning targets or ceilings or agreed production levels at all. The view from Riyadh was summed up today by Aramco chief executive Amin Nasser. Looking forward to the coming year, he said: “There is no additional unconventional oil coming to the market. Actually there is a decline. So the supply-demand imbalance in the market will adjust and stabilise and the gap will be closing and we will be seeing adjustment in the prices going forward, starting in 2016.” When Opec next convenes, Saudi Arabia expects to be able to point to sustained demand growth at last challenging output growth. If it can brandish that, and a pick-up in prices, it will have the luxury of choosing whether to insist the market-share strategy is working and must continue, or give a little ground to critics.

Kuwait’s acting oil minister Anas Khaled al-Saleh loyally echoes the Saudi line. He has said: “I think next year will see better demand and fewer surpluses. I think that next year, and in the second half precisely, we might see a cross in demand and supply.”

The Venezuelans, who saw calls for a 5pc cut to the 30mn b/d and for an emergency meeting in the spring rebuffed, go home disappointed, but not surprised. The 5pc cut call made no progress when it was dreamt up before the June meeting. And, with the Maduro government suffering devastating electoral defeat yesterday, it may well not be last week’s delegation’s problem anymore.

As for Iran, it may well be content with the outcome. Oil minister Bijan Namdar Zanganeh made quite clear that he expected nothing from last week’s meeting and would keep his powder dry. By June, he hopes, Iran’s exports will be ramping up and Tehran will be able to exert more influence. Indeed, Zanganeh has the satisfaction of seeing explicit recognition by his peers of the need to factor returned Iranian crude exports into discussions at the next meeting.

As for the rest, well maybe they got some bargains at Vienna’s famous Christmas markets.

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