Energy Journal: OPEC Keeps a Lid on Simmering Tensions

June 2, 2013 by  
Filed under Solar Energy Tips

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By the time you read this, 12 men and one woman will be sitting down in a Vienna conference room to try to set the oil-market agenda for the next six months. It’s OPEC time!

On the face of it the meeting of oil ministers will be smooth, with agreement likely to maintain the group’s total oil-production ceiling as the price of oil stays resolutely above $100 a barrel.

A couple of months ago Brent crude was drifting toward $90 and the meeting looked to be a humdinger, says Derek Brower of Petroleum Economist, but the producing countries, which between them account for 40% of the world’s oil supply, are feeling flush once more.

A seasonal demand increase and the risk of cuts in an already threat-filled market mean OPEC will likely defer any meddling, Petroleum Policy Intelligence says.

But behind the scenes tensions are simmering, as The Wall Street Journal’s team in Vienna explains.

There are several large elephants in the conference room, including the impact of the North American energy glut on OPEC’s periphery, how to fully accommodate rising Iraqi output and how to close the political divide that has again prevented the choosing of a new secretary-general.

Iraq will produce 400,000 extra barrels a day by year-end, Bloomberg reports, adding to the more than 3 million barrels being pumped right now. The country was given a pass out of OPEC’s quota system so it could rebuild its industry after the war and occupation. It may not want back in if it means crimping its projected increased production.

Earlier in the week, Energy Journal reported on a thoughtful critique of OPEC written by Michael Levi that said it would be unwise to hold an overconfident belief that OPEC no longer matters. Jeff Colgan’s response is also published by the Council on Foreign Relations—he says OPEC’s actions aren’t the key driver of world oil markets and that the price of oil is set by market forces almost entirely outside of its control.

Whether that belief is shared by 12 men and one woman in a Vienna conference room remains to be seen.


What’s new under the sun? The solar industry in the U.S. might be getting a boost as traditional utilities, particularly large users of coal, are pondering entering the market for installing solar panels at businesses and homes.

The Journal’s Ryan Tracy says this is more striking because of skepticism in Washington after failed federal loan payments to panel maker Solyndra.

On the other side of the Atlantic Ocean, the European Union looks likely to push ahead with a plan to impose tariffs, as the U.S. has done, on solar-panel equipment made in China where significant overcapacity is causing industry ructions.

Meanwhile an ambitious plan to export solar power generated from the Sahara to Europe has been ditched. The company at the heart of the plan says Europe can probably provide for most of its needs, EurActiv reports.

So overall the outlook is fair. But clouds remain on the horizon.


Crude-oil futures fell Friday in cautious trading as OPEC members discussed the level of production in Vienna. The WSJ’s market report is here.

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