Liam Denning is a Bloomberg Gadfly columnist covering energy, mining and commodities. He previously was the editor of the Wall Street Journal's "Heard on the Street" column. Before that, he wrote for the Financial Times' Lex column. He has also worked as an investment banker and consultant.

Rani Molla is a Bloomberg Gadfly columnist using data visualizations to cover corporations and markets. She previously worked for the Wall Street Journal.

One of the ironies of the proposed freeze in oil production by Saudi Arabia, Russia and others is that it is -- according to an OPEC delegate quoted by Argus on Tuesday -- aimed in part at building trust.

Oil Slip
Source: Bloomberg

It's understandable that Saudi Arabia may not regard Russia as the most reliable partner when it comes to voluntary supply cuts. But mutual suspicion runs like a fissure within OPEC itself, and thus the cartel's long history of busted production quotas and internecine warfare.

Besides geopolitical and sectarian tensions, simple economics serve to divide OPEC. It would be a lot easier to agree on a common approach to influencing the global oil market if OPEC's members were all roughly equal in terms of income and financial strength -- but they are far from that.

For example, while Saudi Arabia has a financial cushion to absorb the losses inflicted by its strategy of keeping output high, some of OPEC's have-nots (notably Venezuela), do not. Worse, there are wide differences in the oil price each government requires to balance their books.


This, of course, means that OPEC's disparate members only have as much patience for agreements as their fortunes allow.


So until OPEC members are all on an equal economic footing, don't expect "trust" to be a word that has much meaning when new production agreements are unveiled.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the authors of this story:
Liam Denning in San Francisco at
Rani Molla in New York at

To contact the editor responsible for this story:
Timothy L. O'Brien at