As Alí Rodríguez Araque, secretary general of the Organization of Petroleum Exporting Countries, cut across the lobby of Vienna's Intercontinental Hotel on Mar. 16 during a break from meetings with member state ministers aimed at hammering out further output quota reductions, the press scrum quickly closed around him.
The expectation-as it was of each OPEC conference chief leaving the closed-door sessions held to negotiate the specifics of a given production adjustment-was for corroboration of the number of barrels rumored to be cut from the organization's output.
From experience, Rodríguez expected the press's barrage of questions. And the press expected one of two responses: either confirmation of some single number, then thought to be 800,000-1.2 million b/d, or smiling diplomatic silence.
The OPEC secretary general offered neither. Instead, he addressed the press in Latin, saying simply, "Nihil sub sole novum," before making his exit.
Mixed message?
In saying there was "Nothing new under the sun," Rodríguez meant there was no update to OPEC's production-cut deliberations. Yet, there was a deeper resonance to his words, which, against the backdrop of the organization's 40-year history, shows that almost everything nowadays at OPEC is new.
In fact, OPEC's original remit-"to coordinate and unify petroleum pricing policies among member countries" to ensure a stable price for producers and a secure and economic supply for consumers-may be the one thing unchanged since the organization's founding in 1960.
Among that which is new is OPEC's ability to show a united front through six output adjustments in 1 year despite a helter-skelter crude market. As Mehdi Varzi, director of research at Dresdner Kleinwort Wasswerstein AG and a long-time OPEC observer, noted last month, "The unity being shown here would once have been unheard of. It shows just how much the organization has changed."
Though the desired result of OPEC's output cut-to steady its "basket" of crudes around $25/bbl-has yet to be solidly mirrored in the market, the unanimity in member states' commitment to micromanaging oil supply, says Lehman Bros. Inc., has kept the organization "in the driving seat"-and prompted Lehman to raise price forecasts for 2001 to $25/bbl from $24/bbl.
Question of compliance
That said, unity does not equate compliance. And this is old news. Because OPEC states are sovereign, no output adjustment can be foisted on them. As of mid-March, estimates of the volume still to be cut following OPEC's January output reduction agreement varied at 250,000-500,000 b/d. Time will tell if member countries make good on their expressed emphasis on a "firm commitment to maintain full compliance" to this latest cut.
Solidarity output cuts from non-OPEC countries might prove another feature on OPEC's changing landscape in the coming years, although true to OPEC's sometimes byzantine ways, even these offerings are not a surety. After Mexico-in Vienna as an observer-declared it would trim production by 40,000 b/d to support OPEC, cold water was immediately poured on the likelihood by at least one analyst (see related story, p. 27).
Let's hope the sixth-largest oil producer's shortcomings aren't contagious.
