OPEC Members Complete a Civil Session

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It was somewhat comforting to see the members of the Organization of Petroleum Exporting Countries treat one another civilly at Wednesday's Vienna meeting.

The meeting was the first for the members of the cartel since June, and those present were at least able to walk away with a new output agreement. Under the terms of the agreement, OPEC will target 30 million barrels of production daily. That figure was close to the top of the group's figures during the past three years.

On that basis, Saudi Arabia, which, along with its allies, had clashed with a hawkish faction led by Iran, Algeria, and Venezuela, appears to be back in the cartel's driver's seat. The June session had ended without an agreement, along with a comment from Saudi oil minister Ali Naimi that the session had been "one of the worst meetings we have ever had."

The kingdom has maintained that it had produced fully 10 million barrels a day in November, a 25% hike from its previous OPEC quota. The higher production was generally taken as a demonstration of strength that was intended for Iran and the other price hawks, all of whom are producing as much crude as their systems will allow. The Saudi comments about last month's output along with the magnitude of the figure in the new agreement were likely responsible for prices being down nearly a dollar a barrel through mid-day trading today.

The new agreement could be complicated by the resumption of production from Libya. During the country's recent revolution, the likes of Italy's Eni (NYS: E) , France's Total (NYS: TOT) , and U.S.-based companies ConocoPhillips (NYS: COP) , Marathon (NYS: MRO) , Hess (NYS: HES) , and Occidental (NYS: OXY) had halted production, which prior to the war had generally been in the vicinity of 1.6 million barrels a day.

Given that OPEC's output is essentially a zero-sum game, as the companies working in that country resume prior output levels -- with about half of pre-war export levels anticipated to be resumed by the end of this month -- it'll be necessary (at least officially) for other members to curtail their output. But what is deemed official with the members doesn't always square with their actual performances.

Beyond the cartel's published production quotas -- individual country's targets haven't been publicized -- there are a number of factors that will affect global crude prices. Those factors would include optimism or lack thereof regarding Europe's debt crisis, circumstances in Iraq (with the war having officially ended today), concerns about Iran's nuclear ambitions, and military maneuvers in areas where crude transport levels are high.

At this juncture, it's difficult to envision crude prices moving precipitously in either direction in the short term. As such, I'd recommend that Fools with a taste for energy lead with a bottom-up approach to stock selection.

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At the time this article was published  Motley Fool newsletter services have recommended buying shares of Total. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Fool contributor David Lee Smith doesn't own shares in any of the companies named above. The Motley Fool has a disclosure policy.

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