When major oil producers met in St. Peters burg, Russia, on Monday, the talk was tough. Officials hoped to show they were following through on plans to cut production and, in turn, bolster prices. The oil minister of Saudi Arabia, the world’s biggest exporter, even cut short his summer vacation to attend.
The result? Meh.
Markets appear to have shrugged off a raft of announcements meant to address concerns that production cuts agreed upon last year are failing to achieve their goal of soaking up excess oil supply and pushing prices higher.
“Did Saudi pull a rabbit out of the hat?” wrote Helima Croft, an oil analyst at the investment bank RBC Capital Markets. “No.”
The meeting on Monday brought together the 14-nation Organization of the Petroleum Exporting Countries, led by Saudi Arabia, and several other major producers, including Russia and Oman. In a statement after the meeting, the group seemed content with mildly tough talk, chastising (unidentified) countries for failing to follow through with promised cuts to output.
Taken together, the various moves helped push crude prices up about 1 percent on Monday, to more than $48.50 a barrel.
But the relative lack of an effect on oil prices suggested that the agreement was not working, and the tough talk has raised concerns that unity in the group is fraying.
And if this maneuvering has few lasting effects, the whole output-cutting exercise could start looking like a mistake.
“I think the meeting revealed that there are some tensions starting to grow within the group,” said Robert McNally, president of the Rapidan Group, a market research firm.
The oil producers’ group acknowledged that while it wants to cut excess supplies, they remain elevated. If that situation continues into November, when OPEC is scheduled to meet, those tensions could mount and jeopardize the whole effort, Mr. McNally said.