There's an old saw about the definition of insanity: that it’s doing the same thing over and over again but expecting a different result. So, while we've long since concluded that the members of OPEC can be difficult to deal with, they may have demonstrated over the weekend that they're not daffy.
The cartel, which lopped 4.2 million barrels from their daily production quotas during the latter part of 2008, agreed to leave well enough alone in their crude pricing following a five-hour session in Vienna on Sunday. It appears that the 12-member organization's primary motivation in leaving the quotas untouched was the declining status of the global economy.
As to the organization's decision to stand pat, however, it appears that few among its members had any real appetite for further cuts at this time. And since the earlier reductions have only met with about three-quarters compliance -- to say nothing of a million-barrel-per-day global demand decline expected this year -- it's unlikely that an announcement of additional reductions would have been taken seriously among the consuming nations.
For instance, as my Foolish colleague Rich Duprey told you not long ago, after removing the likes of ExxonMobil (NYSE: XOM ) and ConocoPhillips (NYSE: COP ) from operating positions in his Orinoco River basin and bullying France's Total (NYSE: TOT ) and the U.K.’s BP (NYSE: BP ) into minority stakes, Venezuelan President Hugo Chavez has dangled notions of joint ventures in front of a number of Western oil companies.
Hugo's motivation appears to be a significant decline in his country's production, and, of course, prices. Nevertheless, his entreaties have been sufficiently compelling to cause Norway's StatoilHydro (NYSE: STO ) and Brazil's Petrobras (NYSE: PBR ) to pony up sizable sums for information on the area in question.
It also appears that President Obama lobbed a call at Saudi King Abdullah last week. While the contents of the call haven't been disclosed, timing alone makes it difficult to imagine that they didn't include at least a reference to oil prices.
The cartel has agreed to meet again in May. And since the Saudis have said repeatedly that they consider $75 to be a reasonable per-barrel price, once the world's economy begins to recover, watch for that level to be reached quickly.
On that basis alone, I continue to recommend that my Foolish friends remain represented in the energy sector. My two favorites continue to be the biggest of them all -- Exxon -- and BP, a company that has overcome numerous disasters and now offers a dividend yield approaching 9%.
BP sports five Motley Fool CAPS stars, while ExxonMobil has been granted four. Why not add your sentiments to those tallies?
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