For the oil market, it looks like the real OPEC meeting will come a week ahead of schedule.
The cartel is scheduled to meet on Dec. 6 in Vienna, but days earlier the key decisionmakers are set to gather on the sidelines of the G20 summit in Buenos Aires in a meeting that might well decide the direction of oil prices next year.
Saudi Arabian Crown Prince Mohammad bin Salman and Russian President Vladimir Putin, who lead the world’s two largest oil exporters and have been working together to manage the oil market for the past two years, plan to be in the Argentine capital at the end of next week.
Just as important will be US President Donald Trump, who has made his opposition to OPEC a regular theme in his Twitter diplomacy.
“I expect President Trump will be discussing the optimal price range with Crown Prince Mohamed bin Salman and President Putin at the G20,” said Bob McNally, president of Washington-based consultancy Rapidan Energy Advisors LLC and a former White House energy official.
The oil market is abuzz with talk that Prince Mohammad might not be able to defy Trump’s desire for lower oil prices after the White House supported him following the killing of Washington Post columnist Jamal Khashoggi.
Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid al-Falih and Russian Minister of Energy Alexander Novak are also scheduled to travel to Buenos Aires together with their principals, said people familiar with their plans, who asked not to be named because their agendas have not been disclosed yet.
Their presence reinforces the impression that Saudi Arabia and Russia will try to reach a deal ahead of the OPEC meeting a few days later.
The gathering in Buenos Aires comes after a week of near-panic in the oil market.
Brent crude, the global benchmark, on Friday plunged 6.1 percent to a one-year low of US$58.80 per barrel, down 22 percent this month on growing concerns the world is oversupplied.
West Texas Intermediate, the US benchmark, fell close to US$50 per barrel.
Trump had already celebrated the plunge on Wednesday, saying on Twitter: “Oil prices getting lower. Great!”
Yet, he wanted more, adding: “Thank you to Saudi Arabia, but let’s go lower!”
However, the petro-diplomacy is complicated by the fallout from Khashoggi’s murder.
Trump on Thursday confirmed that the CIA told him that Prince Mohammad “might have done it,” in reference to who was responsible for the assassination.
However, he insisted that the CIA “didn’t conclude” that the prince gave the order.
Trump has vowed that the Khashoggi killing would not upend the White House’s relations with the prince.
“We want low oil prices and Saudi Arabia’s really done a good job,” he said.
For the US president, cheap energy equates to a tax cut for the middle class — key to maintaining a tired-looking economic expansion.
For Prince Mohammad, Trump’s support is key to avoiding more aggressive US action.
US congressional leaders have been more skeptical about his denials.
US Senator Lindsey Graham, a senior US Republican who was a long-time supporter of Saudi Arabia, is pushing for “serious sanctions, including appropriate members of the royal family.”
Saudi Arabian crude production has reached an all-time high this month, surging to 10.8 million to 10.9 million barrels per day, up from 10.65 million last month, according to industry executives who track the kingdom’s output.
Yet, not everyone in the oil market is convinced that Prince Mohammad will keep the taps open to please Trump. As much as the US president wants low oil prices, the Saudi Arabian prince needs higher oil prices to finance social and military spending, as well as the lavish lifestyles of hundreds of princes.
“It remains our view that the kingdom will adopt a ‘Saudi first’ policy and prioritize its own economic and social welfare above pleasing the American president,” said Helima Croft, chief commodities strategist at RBC Capital Markets LLC and a former CIA analyst.
In other commodities trading, wholesale gasoline plunged 7.9 percent to US$1.39 per gallon, while heating oil lost 4.8 percent to US$1.88 per gallon and natural gas fell 3.2 percent to US$4.31 per 1,000 cubic feet.
Gold declined 0.4 percent to US$1,223.20 per ounce and silver dropped 1.8 percent to US$14.24 per ounce, while copper slid 1 percent to US$2.77 per pound.
Additional reporting by AP
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