Saudi Arabia has been raising output since 2014 to drive higher cost producers out of the market.
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But North Sea Brent closed 37 cents lower at $47.26 per barrel for November delivery on the Intercontinental Exchange in London.
Brent jumped nearly 5 per cent, only to pare gains after Saudi Energy Minister Khalid al-Falih said there was no need to freeze output for now. USA crude for October, which did not settle on Monday due to the Labor Day holiday, was at $44.02, down 42 cents from Friday’s close.
Saudi energy minister Khalid al-Falih told a UAE-based television channel he was optimistic about cooperation with other producers ahead of a meeting this month in Algiers, adding freezing production was not the only solution.
Brent oil halted a two-day advance as talks between Russian Federation and Saudi Arabia over ways to stabilize the crude market fell short of an output freeze. A previous attempt to freeze output at January levels collapsed in April.
OPEC and non-OPEC oil producing nations (including Russia) are scheduled to meet at the end of this month in Algeria, but few market watchers expect a deal to materialize. “Even if successful, an OPEC freeze would likely be a short term positive but a medium term negative for oil price”.
Iran hinted that it may soon drop its opposition to an oil-production freeze, with a senior official saying the OPEC member’s crude output is closing in on its pre-sanctions level and that limiting supply is “a political decision”.
Qatar’s energy minister Mohammed al-Sada was quoted as saying on Monday that the state welcomed the agreement between Saudi Arabia and Russian Federation, adding that oil markets were on their way to re-balancing.
The ministers announced their countries would set up a joint task force to review the state of the oil market and recommend policy measures aimed at stabilizing it. Despite the waves witnessed in the European markets, the Asian markets managed to report strong gains which helped MSCI’s 46-country share index witness a gain of 0.2%.
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“Surely Iran at some point reached production capacity of slightly more than 4 million bpd, but actual production just before the imposition of sanctions was below 4 million”, the source said.
