What a difference three months can make. Oil prices were fairly buoyant when OPEC met on June 11, with its crude basket valued at $106.20/barrel and heading towards the $110.48/b it would reach nine days later.
By September 11, the basket had plunged to $95.35/b.
The extent of the plunge should, in theory, worry OPEC, which has informally embraced $100/b as the optimal oil price level.
But there are no obvious signs of panic emanating from the oil producer group. Indeed, the past few days have seen three OPEC heavyweights -- Saudi Arabia, Kuwait and Iran -- play down the need for action to combat the price slide.
Saudi oil minister Ali Naimi, in Kuwait for a regular meeting of Gulf Cooperation Energy ministers, couldn't see what the "big fuss" was about.
Oil prices "always go up and down," he said, quoted by AFP, and any measures OPEC might need to take regarding the price drop "should be discussed when OPEC meets" next, in November.
Naimi's OPEC and GCC colleague, Kuwaiti oil minister Ali al-Omair, said prices had not dropped to the extent that OPEC would call an emergency meeting.
In fact, he said, quoted by AFP, "prices are likely to rebound ahead of the winter season."
Iranian oil minister Bijan Zanganeh, whose country is subject to swinging international sanctions that have deprived it of crucial oil revenue by slashing its crude exports, also dismissed the need for OPEC to meet to discuss the price slide.
"Under the current circumstances, holding an urgent meeting is not necessary," he said, quoted by semi-official news agency Mehr, and it was too early to say whether the group would discuss an output cut in November.
Most OPEC countries are producing at or very close to their current limits, in particular those outside the high-reserves Gulf region.
And even within the Gulf camp, only Saudi Arabia has the kind of crude output capacity that can feed or starve markets.
It is largely Saudi Arabia that drives OPEC policy, adjusting supply informally in response to changing market conditions.
No sign of panic
The Saudis, as Naimi's comments show, are not exactly panicking, which is not surprising in view of the extent to which they can cope with lower oil prices.
Saudi investment bank Jadwa said last December that the kingdom would likely need an average oil price of $81/b for Saudi export crude, or about $85/b for Brent, to balance state revenues with government spending.
Brent traded below $97/b on September 11. On September 12, it was trading slightly above $98/b.
That begs the question: how low is Saudi Arabia willing to see oil prices go before taking action?
Analysts are trying to work out whether Saudi Arabia sees market share as a greater priority than outright prices and is prepared to allow the price drift further down in order to maintain that share.
Riyadh has simultaneously given conflicting signals, on the one hand telling OPEC that it cut oil production by 408,000 b/d between July and August, and on the other Saudi Aramco reducing crude prices to all regions for October.
Neil Atkinson, director of research at Lloyds List Intelligence, said it was unclear at this point whether Riyadh's priority was to support oil prices -- as might be interpreted from the 408,000 b/d output cut -- or to maintain its market share -- as the Aramco price reductions might suggest -- in an increasingly well-supplied market.
"In 2014, US oil production is already 1 million b/d more than it was last year. Canadian production is about 400,000 b/d higher than it was last year," he said, adding that year-on-year world oil demand growth was only 1 million b/d and that expectations of demand growth were constantly being revised downward.
With demand growth stagnant globally and oil supply rising, "over time, it's inevitable that prices are going to fall. Unless there's a major change in dynamics, it looks as if we're in a new era for oil prices, which is at a level $10/b lower than we've been used to in the past two or three years," he said.
Rocks and hard places
Saudi Arabia, Atkinson said, "is caught between a rock and a hard place." Lowering prices to preserve market share -- particularly in Asia, where it faces competition from West African producers that have seen their exports to the US drop -- makes sense.
"On the other hand, cutting output to prop up prices creates another quandary. If they cut production, they're losing market share," he said.
The International Energy Agency said September 11 in its latest monthly oil market report that the Saudi supply dip "seems primarily to reflect reduced import demand from US refineries, as well as weaker-than-expected crude demand in Europe and Asia."
Indeed, the IEA said, "Saudi exports as a whole are likely to have run below 7 million b/d for the last four months, their lowest level since September 2011.
Exports to the US led the drop amid rising Saudi domestic demand for crude burn and refinery runs."
Furthermore, the IEA said, "state oil company Saudi Aramco appears to be pricing oil out of the US market by ratcheting up official selling prices to North America, while OSPs to Asia have come off, likely setting the stage for a broad rebalancing of trade flows. This is the global crude market continuing to adjust to the new North American supply reality."
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