Last week, the financial markets observed exactly how powerful the OPEC is and more specifically its largest producer and exporter Saudi Arabia. Last week on Monday, words got out that the OPEC members would be holding an informal meeting in September, on the sidelines of International Energy Agency’s (IEA) biennial meeting in Algeria. Next day an email got leaked, where Saudi Arabia’s energy minister Khalid al-Falih talked on cooperation with both OPEC and non-OPEC producers to balance oil market if necessary. The oil price reversed losses and had its best week in months. Oil price is still grinding higher only been deterred by the stronger dollar.

However, in recent memory the OPEC has only promised and gave hope to the market bulls which over time turned out to be empty bullets. The April embarrassment is yet not a long forgotten memory. For the first time in decades, both OPEC and non-OPEC producers were closer than ever in finalizing a production freeze deal, which finally broke down due to the opposition from Saudi Arabia over Iran’s non-participation. Iran last year received sanctions relief from the west over the nuclear deal and was returning to the market after decades and was ramping up production. It still is. The numbers of such failures to deliver as promised have become so common in recent memory it is very difficult to grasp the idea of cooperation among its members. The arch rivalry between Saudi Arabia and Iran has literally paralyzed the organization.

Many of the OPEC members, such as Nigeria, Venezuela, Algeria, Gabon, and Angola are suffering from the lower oil price, yet the organization hasn’t taken up steps to improve the oil market balance and that puts serious doubts whether it is driving for a common good or not.

The price action surrounding the oil price suggest that there is still optimism left with regard to OPEC and some in the market really believes that action might happen this time around but we remain skeptical. Take note that Iran has said that production levels are yet not met, which basically means no cooperation. By the time Iran reaches its desired level, the production freeze level would be much higher. Major producers like Russia and the Saudi Kingdom are ramping up production.