A small dinner on the eve of OPEC's Jan. 17 meeting in Vienna brought together a handful of representatives of big producing countries, oil companies, and consultants. Keeping prices in relatively lofty zones is certainly the intent of the big OPEC players led by Saudi Arabia, the world's largest exporter. Led by Oil Minister Ali Naimi, the Saudis are trying to micromanage the oil markets to an extent never previously seen. Their tactics aren't irrational. The Saudis are trying to match supply to the annual cycles of demand as well as adjust to the world economy's performance.
Demand generally falls in the second quarter as the world's thirst for heating oil abates.
It then picks up again later on as motorists' demand for gasoline heats up. The question is whether the Saudis can pull it off. They certainly haven't in the past. Fear of revisiting that scenario is still a major motivating force. But the decision to cut output, which seems to have been taken in principle late last year, now looks somewhat dated.