A routine OPEC meeting in June suddenly is full of intrigue

“The president has become the caretaker of the oil ministry. Therefore, if the OPEC meeting is held during this time, he will take part in the meeting,” Mohammad Reza Mir-Tajeddini, deputy president for parliamentary affairs, was quoted as saying by the semi-official Fars news agency.

There was no one available at OPEC’s Vienna secretariat to comment on the report.

There have been dramatic events in the political arena since OPEC’s December meeting. The so-called Arab Spring, precipitated by the self-immolation of a jobless Tunisian graduate, has spread through North Africa–removing the presidents of Tunisia and Egypt from power–and into the Arab world.

Among OPEC states, the regime of veteran Libyan leader Moammar Qadhafi is engaged in a fight for survival against a Benghazi-based rebel movement and is under UN, US and EU sanctions.

It’s still unclear how OPEC will handle any Libyan participation in the upcoming meeting. The Tripoli-based government of Moammar Qadhafi is currently without an oil minister following the defection of Shokri Ghanem, who reportedly fled to Tunisia last weekend. It has so far not been possible to contact Ghanem to verify the reports.

In the meantime, Libya’s rebels are hoping to send representatives to the June 8 meeting.“We want to attend, and will study the legal procedure,” said Mahmud Shammam, media spokesman for the rebels’ National Transitional Council. “We still do not know if OPEC will invite us.”

Libyan oil production has plunged to an estimated 200,000 b/d in April from close to 1.6 million b/d since the start of the armed insurrection against Qadhafi’s 41-year rule.

The presence of a representative from the Qadhafi government would undoubtedly raise the potential for some acrimony over the decision by Qatar to facilitate oil sales by the rebels and its agreement, along with Kuwait, to provide funding for the Libyan rebels.

Despite OPEC’s insistence that it is an economic rather than a political organization, Gulf regional politics will at least be lurking in the background if not playing at the forefront of the June meeting.

Diplomatic relations between Iran and its Arab neighbors have deteriorated in recent months, largely over Tehran’s criticism of their Bahrain policy. The Arab members of the Saudi-led Gulf Cooperation Council sent troops to Bahrain in March to help put down anti-government protests by the mainly Shi’ite opposition against the Sunni Muslim monarchy.

Iranian foreign minister Ali Akbar Salehi has been flying around the region over the past few weeks, visiting Iraq, Oman, Qatar, the UAE and Kuwait. Salehi, whose country is the leading Shi’ite Muslim power in the region, had warned during his visit to Qatar of “bad repercussions” from the situation in Bahrain, where authorities are accused of oppressing the Shi’ite majority.

Iran also has been critical of unilteral moves by OPEC’s Gulf Arab producers to boost production alongside rising crude prices. In recent months, those OPEC countries with spare capacity pushed out extra volumes as oil prices rose, Saudi Arabia boosted output to around 9 million b/d, around 1 million b/d more than its notional quota, as the conflict in fellow OPEC member Libya sharply cut exports from the North African country.

The latest monthly Platts survey of OPEC and oil industry officials and analysts estimated output from the 11 members bound by quotas–Iraq does not have one–at 26.18 million b/d in April, nearly 1.4 million b/d in excess of the notional 24.845 million b/d official ceiling.

That ceiling, in place since January 2009, has been rolled over at meeting after meeting as ministers opted not to open the Pandora’s box that is the quota system.

The current quotas–which, incidentally, have not been published–were agreed to in late 2008 when the world was reeling from the global financial crisis that slashed oil demand and sent crude prices crashing from an all-time high of more than $147/barrel in July of that year to below $40 in just a few months.

But prices are much higher now. When OPEC met in Quito six months ago, oil prices were in the $90s per barrel range, but it wasn’t long before they were climbing, and by April 11 Brent had climbed above $127/barrel, its highest level in two-and-a-half years.

Recent weeks have been highly volatile, however, with Brent dropping back by nearly $22 to $105.15/barrel on May 6. The drop was been even more precipitous in percentage terms in the case of the New York Mercantile Exchange’s US light crude contract, which plummeted from $114.83/b on May 2 to $94.63/b on May 6.

There was a suggestion earlier this month that OPEC kingpin Saudi Arabia might want to see OPEC raise artificially low output quotas to reflect actual production more closely. Although an agreement to raise the ceiling can not be ruled out, it may prove difficult at a meeting where politics is likely to take center stage, relegating oil production issues to the wings.

Platts