LONDON: Energy ministers from the world s largest oil producers and consumers are likely to agree on the need for stable oil prices and better and more timely data on energy when they gather in London on Friday.
That is probably where the public agreement ends.
The world s most powerful energy players will be attending a meeting first called by British Prime Minister Gordon Brown at an emergency Jeddah summit in June, when oil prices were spiraling up towards $150 a barrel.
But the world has changed in the last six months.
OPEC ministers arrive directly from a meeting in Algeria, which on Wednesday announced the group s biggest ever oil production cut in an attempt to arrest a collapse in oil prices.
Members of the Organization of the Petroleum Exporting Countries, Russia and other producers want to halt a fall in the oil market that has plunged more 70 percent since July. US crude oil is now trading at just over $40 a barrel.
The implosion of the oil market has reduced oil exporters revenues and left many facing huge budget deficits.
Representatives of the big oil consuming nations are also keen to halt the wild swings in oil prices but few of them are prepared to argue for higher prices, at least in the short-run, as they battle the most severe recession since the 1930s.
The volatility over the past year has been good for neither producers nor consumers, said analyst Simon Wardell at Global Insight.
Tax breaks
The huge drop in oil prices has been particularly useful for consuming nations in recent weeks as they battle recession, because it acts as a kind of extra tax break, but very low oil prices are not necessarily good for anyone in the long run.
While consuming countries wouldn t want to talk in terms of suggesting a price band for oil – that would be too much like interference in the market – they probably want prices where their environmental commitments look economically viable, said Julian Lee, analyst at the Centrer for Global Energy Studies.
That is somewhere above where oil prices are now – though I don t think many governments would be prepared to admit it.
While the drop in oil prices has been broadly welcomed by the industrialized world, it has distorted governments climate change agendas, increased economic instability, raised fears of a future supply crunch, and ravaged producers revenues.
Both consumers and producers worry that very low oil prices will discourage investment in hydrocarbons and alternative, renewable forms of energy.
So while producers and consumers are likely to disagree about where prices should be near-term, they can find common ground in opposing market volatility.
The need for better and more timely oil market data is another thing both groups can on.
The market has been crying out for reliable and timely energy data since the year dot, said oil consultant Geoff Pyne. All sides of the oil markets would benefit from a source of data on which everyone could rely.
Data on the oil market currently comes from three main sources: OPEC, the Paris-based International Energy Agency (IEA), and the US Energy Information Administration (EIA).
Some of the best data come from the EIA s coverage of the United States, but its worldwide data is less timely. Much of the global data from OPEC and IEA is also seen as out of date.
The UK government has prepared papers ahead of the meeting on both the IEA and OPEC s supply and demand projections, and on the relationship between financial markets and the oil market.
