1. On Thursday, over 200 oil industry representatives and financial analysts will meet at the Organization of the Petroleum Exporting Countries headquarters in Vienna, Austria. This meeting is supremely important given the state of the oil industry.
2. In recent months, oil prices have continuously fluctuated. West Texas Intermediate crude, for example, was $76 a barrel in early October (the highest level since 2014), but dropped to below $50 a barrel last Thursday.
3. Accordingly, at the meeting, “Most analysts say that the oil producers have little choice but to announce a substantial cut in production of at least one million barrels a day, or around 1 percent of world oil supplies.” If they don’t do this, oil prices could potentially fall under $40 per barrel and there would be a “massive oversupply” of oil next year.
4. OPEC, though, is facing constraints from President Trump, who, more than any other U.S.President, is committed to influencing the oil market. On Wednesday, he tweeted, “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”
5. Still, OPEC has tremendous political and economic influence. “The 15-member organization produces about 40 percent of the world’s oil,” and they have a history of changing and guiding the oil market. In fact, Helima Croft, an analyst at RBC Capital Markets, said, “At the end of the day they are the closest thing to a regulator or central bank of the oil markets.”
6. Analysts are confident that in the short run OPEC can indeed stop price drops and combat the oversupply of oil. Halting price drops in the long run, though, is nearly impossible to predict.