FEATURE: OPEC+ growing 'more opaque' as Vienna oil gathering shunned for 'Zoom'

Since moving its headquarters to Vienna in 1965, OPEC ministers have typically gathered at least twice a year in the Austrian capital to formulate oil production policy, their every move watched by a throng of reporters and analysts aiming to bring transparency to these market-moving summits.

Those days are becoming rarer. The next meeting, now scheduled for Dec. 5, will be the third in a row to be held virtually, while the market increasingly meets announcements by OPEC and its Russia-led allies with a shrug, despite OPEC+ currently holding back 5.8 million b/d of crude output.

Sources say the shift to online meetings -- one of the most consequential communications changes in decades -- shows the consolidation of power in Riyadh, rather than Vienna, and an effort to prevent leaks. That threatens not only smaller members, who have been largely frozen out, but also market transparency, analysts say.

"It does seem that the issues on production and adjustments are being run outside of the secretariat," one OPEC+ source, speaking on condition of anonymity, told S&P Global Commodity Insights. "It just seems to be one person setting the agenda at the moment."

That one person is Prince Abdulaziz bin Salman, Saudi Arabia's energy minister and half-brother of Crown Prince Mohammed bin Salman. The Saudi energy ministry did not respond to requests for comment.

One OPEC+ delegate said the move was part of a cautious approach to avoid "sensational headlines", adding that all members are consulted on policy changes ahead of time. But they added: "We know we have two big players -- Saudi and Russia...I fully understand they don't want anything to leak."

Bhushan Bahree, a long-time attendee at OPEC meetings who is now a senior analyst for Commodity Insights, said the group had become "much more opaque" since he began covering the producer bloc, with decision-making "very much contained in countries that are taking the biggest cuts or who have potentially more oil to sell."

While the last meeting in June was shifted online with little notice -- like last November's -- a handful of voluntary cutters were dragged to Riyadh.

"You just have these remote decisions that come down. And maybe if the decision-making is in such limited hands, maybe they just don't want all of this [circus]," said Bahree, who is executive director of Commodity Insights' oil markets, downstream and chemicals team.

Other OPEC-linked officials have told Commodity Insights that virtual meetings were unavoidable due to social distancing during the coronavirus pandemic, but restrictions on public events are now a distant memory.

Challenging picture

Avoiding Vienna and greater scrutiny from allowing the press inside the secretariat building on Helferstorferstrasse 17 may be understandable in the current market. Dated Brent is locked in the low-to-mid $70s/b despite layers of overlapping production cuts costing OPEC+ market share amid sky-high output in the Americas.

Platts Dubai, the primary Middle East sour crude benchmark, was assessed at $71.89/b on Dec. 3 and has not breached $80/b since Aug. 1. Platts is a part of Commodity Insights.

Analysts widely expect eight voluntary cutters -- Saudi Arabia, the UAE, Kuwait, Kazakhstan, Algeria, Oman, Iraq and Russia -- to delay for a third time plans to start tapering 2.2 million b/d of reductions at the now-rescheduled Dec. 5 online meeting.

Meanwhile, overproduction by key producers including Iraq, Kazakhstan and the UAE, according to OPEC's secondary sources, have tested the group's credibility and cohesion just as the market could be heading into a first-quarter supply glut.

"The idea is that when we meet [in person], there is something substantial," said a senior delegate, adding that the alliance's efforts to stabilize the market and "very cautious approach" were yielding results.

In-person meetings allowed journalists to quiz delegates in hotel lobbies and at a notorious press scrum at the secretariat. One former Saudi energy minister even liked to brief reporters on early morning walks, sometimes moving the market in the process.

Disagreements within OPEC are nothing new, but long-time watchers say the sheer dominance of Saudi Arabia -- which is pumping at levels not seen since the coronavirus pandemic -- and Russia is.

For certain smaller producers, including some African members -- whose influence has waned due to underproduction and the death of former Secretary General Mohamed Barkindo -- it is a largely unwelcome change.

"Everybody's asking why," said an African delegate on the last-minute shift. "If you have a schedule, you want to go by your schedule."

The last in-person meeting in June 2023 saw the Angolan oil minister, Diamantino Azevedo, storm out amid a row over its OPEC quota. The country later quit the bloc.

Virtual meetings have not improved compliance, perhaps the alliance's biggest challenge. The UAE, which has overproduced in recent months according to secondary sources, is due to start boosting output by 300,000 b/d gradually from January, potentially riling other members.

Meanwhile, Kazakhstan, Iraq and Russia have submitted compensation plans.

Gabon's oil minister told an energy conference in Cape Town this month that his country's 50,000 b/d overproduction was "peanuts" compared to others, and could increase further without issue, despite demands for compliance by OPEC bosses.

One delegate said all overproducers should compensate. "We expect all countries to fully respect their collective and voluntary commitments," they said. "There is no discussion on a particular country but on all countries."

The OPEC secretariat did not respond to requests for comment.

While fewer leaks and stricter messaging might help OPEC+ present a more united front, it also risks making the group appear less transparent, even as it claims to be acting as a de-facto "central bank of oil".

To be sure, Bahree highlighted that the shift online could also reflect technological advances and the historical transparency of OPEC meetings compared with other international summits, where press access is much more restricted.

"It's kind of a natural evolution -- you didn't have Zoom calls when OPEC was set up in 1960s," he said. "[OPEC] was an unusually open setup, where you could talk to people in the street...it was always an anomaly."

In volatile times, a continued retreat from Vienna could leave the OPEC+ grouping less accessible from the point of view of the world's largest commodities market.