Sore Throat May Bring Relief to Oil Market

There’s a popular saying to describe the importance of the U.S. to the world economy: “When America sneezes, the world catches a cold.”

This week, the American economy seems to have a least infected the Saudi Oil Minister, Ali Al-Naimi. Mr. Naimi, who decides production levels at the world’s largest oil exporter, told reporters at the start of the OPEC meeting in Vienna: “Don’t waste your time, go talk to someone else.  I have a sore throat.”

Mr. Naimi has said little in public this week, but has apparently been doing a lot of talking in private in a series of behind-the-scenes meetings to convince other skeptical members of the group that OPEC should increase its oil production, perhaps by as much as 1.5 million barrels a day.

If his throat is sore from these pleas falling on deaf ears, it is in large part due to uncertainty about the strength of the world’s largest oil consumer–the U.S.

A stream of negative economic data in the past week has stoked fears that a previously robust U.S. economic recovery is faltering. If the U.S. stumbles, other OPEC members fear that oil demand could fall and prices follow it.

“We have to wait and see the behavior of inventories and demand at the end of the year” before changing oil production, said Venezuelan Oil Minister Rafael Ramirez. “Demand is an uncertainty. The recovery of the economy is an uncertainty,” he said.

Mr. Ramirez is one of the most intractable skeptics at Wednesday’s meeting, but there are signs that other members, notably Iran, may drop their previous opposition to allow a modest increase in production.

If so, oil consumers should be grateful for Mr. Naimi’s sore throat.