OPEC meeting unlikely to result in major changes, say analysts

This Thursday’s meeting of the Organization of the Petroleum Exporting Countries is unlikely to result in any major change to the oil market, according to analysts at HSBC and Morgan Stanley.

“The standoff between Saudi Arabia and Iran continues, making any agreement on production highly unlikely,” said HSBC.

“We find it interesting to see that both Iraq and Iran have claimed record production levels in recent days, which could be seen as posturing ahead of the June OPEC meeting.”

Meanwhile, Morgan Stanley said the meeting was unlikely to end in anything other than a statement of support for the current condition of oil markets.

The bank said that while headlines could create some volatility in markets, it’s likely to be another status quo meeting with similar results as the one in December. Still, with low expectations and limited positioning ahead of the meeting, any surprise could have an outsized impact, MS said.

“OPEC abandoned its quota at the last meeting, and given recent policy decisions and personnel changes at several members, expectations for any OPEC quota discussions are low.

“Therefore, commentary about the state of the oil market and individual country policy will likely be more important. Of particular interest will be Saudi Arabia’s comments on oil markets, policy and OPEC’s role, as well as Iran’s production outlook and oil policy. We will also listen for any comments about members’ efforts to grow production or invest.”

MS said it expects to hear some freeze talk, particularly from fiscally-distressed nations, but reckons few members are willing to sacrifice revenue at this stage.