After days and nights of diplomatic drama in Vienna, OPEC meets on Friday to decide its oil production policy for the second half of the year.
Iran is still rejecting any deal after walking out from preliminary discussions that led to a tentative deal to boost production on Thursday. Here are the most likely scenarios for the decisive gathering, based on the group’s storied history:
The 2000 formula
Almost two decades ago, OPEC faced a similar situation.
Under pressure from the U.S. as prices were nearing $ 30 a barrel for the first time since the early 1990s, Saudi Arabia in March 2000 corralled other nations to boost production. Iran refused to follow, and despite several attempts to reach a face-saving deal, the meeting ended without a formal OPEC deal.
The Saudis, however, convinced nearly everyone else to sign a statement announcing a large oil output boost. It was called the OPEC-9 communique in a reference to the number of member countries that got on board.
The fact that OPEC ministers on Thursday managed to agree on boosting output by a theoretical 1 million barrels a day — even though the real increase would end up being smaller — suggests this route is likely.
In June 2011 OPEC talks broke down, prompting Ali Al-Naimi, then the Saudi oil minister, to complain he just had had “one of the worst meetings ever.”
If Iran continues to oppose a deal when ministers formally gather on Friday and musters the support of others — perhaps Venezuela, Iraq and Algeria — OPEC may be unable even to issue a communique, let alone decide to increase production. In that case, Saudi Arabia, and maybe Russia, are likely to go it alone and unilaterally boost output — as Riyadh did in 2011.
They could announce it publicly, or Moscow and Riyadh could do it quietly.
Iran makes a U-turn
Tehran is an ultimate negotiator, waiting until the last minute to agree to a deal in an effort to extract concessions.
In the past, Iran has made U-turns, so it’s possible — albeit unlikely — that this will be the case again. If so, it’s possible that Tehran would obtain some sort of compromise from the rest of OPEC.
One possibility would be a smaller production increase. Another concession Iran might seek could be the inclusion of criticism of U.S. sanctions in the group’s communique. The latter would be extremely unlikely, though, as Saudi Arabia is all but certain to block it.
Saudi Arabia compromises
Riyadh is the leader of OPEC and deeply cares about the unity of the 58-year old group, one of its major diplomatic achievements.
So, the kingdom may want to compromise and go for a smaller oil production increase, the option that apparently Iran favors, to get an unanimous communique. The chances are low, though. Saudi Arabia has the support of the majority of the group, plus the backing of Russia, so it’s unlikely that it feels it needs to cave in to Iran’s pressure.