OPEC will seek to defy expectations and finalise a deal in Vienna reducing its oil output for the first time in eight years in an effort to boost painfully low crude prices.
Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization of 14 nations, founded in 1960 in Baghdad and headquartered since 1965 in Vienna.
As of 2016, OPEC’s members are Algeria, Angola, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia (the de facto leader), United Arab Emirates, and Venezuela.
Two-thirds of OPEC’s oil production and reserves are in its six Middle Eastern countries that surround the oil-rich Persian Gulf.
It remained to be seen, however, whether the cartel’s big guns Saudi Arabia, Iraq and Iran can overcome their fierce rivalries and agree who will do most of the heavy lifting on Wednesday.
Saudi Arabia, the effective leader of the bloc, wants to reduce oil production in order to drive prices up. Even if the kingdom is extremely wealthy, prices are still half what they were two years ago.
As a result, the country has slashed salaries and spending and is on course for a budget deficit of $87 billion in 2016, owing foreign firms billions in unpaid bills.
The price fall has also exacerbated an already desperate situation in Venezuela, where Human Rights Watch says food and medicine shortages are so bad that there is a “profound humanitarian crisis“.
But Saudi demands for a reduction have been met with stifs resistance from Iran, a country desperate for money to counter the effect of Western sanctions on its economy.
Iraq too does not want to cut production because it needs all the money it can get to fund its fight against Islamic State of Iraq and the Levant group (ISIL, also known as ISIS).
The 14-country group made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million barrels per day (bpd) versus the current 33.64 million bpd to prop up oil prices.
Back then, OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.
If OPEC members fail to agree a deal at Wednesday’s meeting, experts expect oil prices, at under $50 per barrel to head further south perhaps to $40 or even $30.
In addition, a failure in Vienna would deal a further blow to the already damaged credibility of the Organization of the Petroleum Exporting Countries, 56 years after its creation.
“I think the market will respond very dramatically if we don’t see a proper deal,” Richard Mallinson, a geopolitical analyst from Energy Aspects, told Al Jazeera.
“We will see oil prices fall back in to the thirties and that means lower revenues for all of these countries.
“And given that they had already suffered under low prices, this ciould have real consequences for the middle eastern region as a whole.”
Since OPEC’s 14 members produce only slightly more than a third of the world’s oil, their ability to reduce the global supply surplus and influence prices is limited.
The cartel’s efforts to convince other countries, not least Russia which pumps 11 million bpd, to reduce output as well have fallen flat.
Hit hard by the low prices and Western sanctions, Moscow has said it is ready to freeze output but not to cut it.
Russian Energy Minister Alexander Novak pulled out of an expected visit to Vienna, seeing “no need” to talk to the cartel while there is no agreement.
While consumers might not welcome the more expensive fuel that a deal would bring, OPEC members’ public finances have been shot to bits by two years of rock-bottom prices.
Even fabulously wealthy Saudi Arabia has slashed salaries and spending and is on course for a budget deficit of $87bn in 2016, owing foreign firms billions in unpaid bills.
This in turn has hit investment in oil facilities, raising the prospect of oil shortages and “shocks” further down the line, the UAE’s Mazrouei said.
Further downwards pressure on oil prices could come from the United States, where president-elect Donald Trump’s promise to boost the domestic oil sector, leading to yet more crude flooding the market.