Within the past month or so, Ecuador, Angola and Sudan have all signaled their interest in joining OPEC. But would they substantially boost the cartel's power in world energy markets?

The combined production of these potential members equates to about 8% of OPEC's total output as of October 2006, or about 3% of global production, says J. Marshall Adkins, director of energy equity research for Raymond James & Associates in Houston.

"Put another way, the three countries bring 2.44 million barrels per day of new oil output under OPEC's sphere of influence-a volume roughly equal to the daily production of Kuwait."

In terms of oil reserves, the tally of what Ecuador, Angola and Sudan bring to the OPEC table is even less than their production. All in, the proved reserves of the three countries amount to 20.5 billion barrels, or only 2.3% of the cartel's current proved oil inventory.

"Thus, in aggregate, their contribution to OPEC would be slight, and individually, it would be negligible," contends Adkins. "In sum, the effect of these countries joining the cartel is a non-event."

While this may be true-in terms of what Ecuador, Angola and Sudan are able to contribute in the way of production and reserves-the consequence of their prospective integration into the cartel could well be, on the other hand, a widening of the geopolitical-risk premium already embedded in world oil prices.

"OPEC already includes some of the least-stable major oil producers in the world, such as Venezuela, Iraq and Iran," Adkins notes. "So if anything, the addition of these new members would further magnify the overall risk profile of the cartel's oil production."

Sudan has just emerged from a two-decade-long civil war, and the Darfur crisis shows no signs of calming down, he notes. Meanwhile, Ecuador continues to suffer from endemic political instability. And, although Angola is now experiencing relative calm, it has also had its share of historical instability, in terms of civil war and humanitarian crisis.

Adkins believes the most relevant near-term event for crude oil and energy stocks is whether OPEC decides on another production cut for its members, and whether those members-given that they rely heavily on oil revenues for their national budgets-abide by that decision.

The bottom line? "Watch the actual production numbers from Saudi Arabia-the swing producer within OPEC and the only member with meaningful excess capacity-along with those of Kuwait and the UAE to see if the oil market will balance during the next couple of quarters."

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