OPEC and the oil glut: An oily mess

Nigeria wants OPEC to cut oil production. Its pleas are unlikely to be heard

NIGERIA is among the OPEC members hardest hit by the fall in the oil price: a decline which the cartel’s hands-off approach to production has prompted. In the run-up to the presidential election (postponed earlier this month and now scheduled for March 28th) the government there has had to raise taxes and cut spending. Nigeria’s oil minister, Diezani Alison-Madueke (see picture), also holds the rotating presidency of OPEC, and on a visit to London this week she was trying hard to talk up the chances of a return to business as usual: production cuts and a higher oil price.

OPEC, she said, risked “driving [itself] to oblivion” if it allowed the price to fall again. She said in an interview with The Economist that she wanted an emergency meeting of the body within six weeks, or earlier if the price falls further. She also called for closer cooperation with Russia—the world’s biggest producer outside OPEC.

Unfortunately for Mrs Alison-Madueke, real power in OPEC lies not in the presidency, but in the Gulf. Producers such as Saudi Arabia and its neighbours have no desire to cede market share to non-OPEC producers. They are hoping that low prices will cut capacity in high-cost oil producers and can endure many months of low prices. They have already rebuffed efforts by Venezuela and Iran, which are in similar straits to Nigeria, to have production limits restored. Mrs Alison-Madueke’s initiative seems likely to meet the same fate.

Nor does cooperation with Russia look likely. In an ill-starred encounter on the sidelines of the OPEC meeting in Vienna last year, Russian delegates tried to woo the Saudi delegation to support production cuts. Hoping to keep the meeting private, they arranged for the Saudi oil minister Ali al-Naimi to enter the Hyatt hotel via the kitchens. The protocol-conscious Saudis regarded that as a insult and the meeting ended abruptly amid some highly undiplomatic language. Mrs Alison-Madueke says any oil minister would have objected to such treatment. But some can afford to more than others.