Opec ministers gather this week in Vienna to review cartel's oil output levels against the backdrop of a weak global economy, fragile demand, oversupply and simmering Iran tensions. The Organisation of Petroleum Exporting Countries (Opec), whose 12 member nations pump one third of the world's crude supplies, will meet on Thursday in the Austrian capital where the cartel is headquartered.
At their last gathering in December, Opec members agreed to hold actual output at 30 million barrels per day, citing an uncertain demand outlook, with extra unofficial production coming from Saudi Arabia, Iraq, Kuwait and Libya.
Experts predict Opec this around will again make no move, keeping its official output target at 24.84 mbpd - where it has stood for more than three years - despite sharp price falls that have cut precious revenues.
Members are divided on the issue, with hawkish Iran and Venezuela eager to push oil prices back above $100 per barrel. In recent weeks, oil prices have fallen sharply, hit by oversupply and demand concerns linked to the eurozone debt crisis and the deteriorating global economic outlook.
The market remains on tenterhooks over the eurozone crisis, with all eyes on upcoming Greek elections on June 17. It must also factor in the news that Spain has secured a European lifeline of up to 100 billion euros ($125 billion) to save its stricken banks, following an emergency eurozone conference call on Saturday.
At the same time, Iran - the second-biggest Opec oil producer after kingpin Saudi Arabia - is in the spotlight over its hugely controversial nuclear energy programme. "To a large extent, oil policy appears to be on a watching brief for the rest of the quarter until the Greek and Iranian issues have more clarity," said Barclays Capital analyst Paul Horsnell.
"Unless Opec is pushed towards action by a sharp lurch down in prices, the status quo of watch-and-see is likely to continue and ... an end to (prices above $100) ... does not seem sufficiently provocative in itself to produce action." Western powers and Israel suspect Iran of trying to develop a bomb behind the veil of its civilian nuclear programme, a charge denied by Tehran, which says it is developing civilian atomic power. An EU oil embargo against Iran is due to come into force on July 1, adding to a range of sanctions imposed under UN resolutions.
Inenco analyst Gary Hornby argued that Opec would be happy to maintain the status quo because a low oil price was needed to boost growth. "There is not expected to be an agreed reduction in oil output at the moment, so expectations are for current production targets to remain the same," he told AFP.
Brent oil briefly spiked to $128 in March, hitting levels not reached since July 2008 on supply jitters, but it has since slumped by about a quarter to strike 17-month lows. "Although oil prices have dropped below $100 per barrel recently on economic concerns, there seems little sign of any production fall," Hornby said.
"A low oil price is almost essential for the global economy at the moment, with demand concerns in the future based on the eurozone debt crisis and a slowdown in US and Chinese economic growth figures. "In addition, the EU-wide Iran oil embargo from July 1 and further reductions in Iran purchases from Asia should also keep any production falls at bay in the short-term."
Commerzbank analyst Carsten Fritsch said the market has been weighed down by oversupply in recent months, which have offset supply-side tensions. "The supply risks are completely priced out and investors are focusing more on the supply surplus," Fritsch said "At Opec's meeting ... calls are thus likely to be made for Saudi Arabia to cut its over-production."
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