The OPEC source said Iran’s production before sanctions had never exceeded 3.75 million bpd according to secondary sources, which include consultants and industry media that estimate output independently.
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Imports into the U.S. Gulf Coast fell to 2.5 million barrels per day, the lowest since data collection began in 1990. Thus, oil ETFs may witness a sentiment-driven rally on output control talks, but that rally is likely to be short-lived.
OPEC’s largest producer Saudi Arabia insisted all nations should join and the freeze deal collapsed in April.
The International Energy Forum will take place in September 2016 in Algiers, when the OPEC countries plan to hold an unofficial meeting, supposedly to renew discussions on the oil production freeze.
Prices rallied briefly earlier this week when Saudi Arabia and Russian Federation signed an oil-cooperation agreement but the market quickly lost ground as the two crude heavyweights stopped short of pledging production limits. This could mean US production, which is down from last year’s highs, is close to bottoming out, analysts say.
World oil prices rose by more than 1.5 percent on September 8, following USA data on a large drawdown in crude stocks, which was triggered by the impact of an Atlantic storm. Arguably it has little to gain from opposing a freeze once its target is hit given the limited capacity to further raise output.
There was no commitment to the much-vaunted freeze on output, with Saudi Energy Minister Khalid al-Falih stating they are in no hurry to limit output, although it is a possibility for the future. But all hopes went down the drain as the OPEC top-brass Saudi disagreed to the deal citing Iran’s lack of participation (read: How to Profit from the Failed Doha Meeting via ETFs). For now, most of the representatives of the worldwide expert community seriously doubt that the summit participants will end up being positive on those production cuts.
He pointed out that together Russian Federation and Saudi Arabia cover more than 20 percent of the demand in the oil market and coordinating activity will significantly influence the balance of forces.
With under three weeks until the crucial oil producers meeting, markets are attempting to decipher comments from numerous major actors with a view to understanding where we stand in relation to a potential production freeze.
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“But at some stage it’s the law of diminishing returns when you keep talking about a production agreement and not actually reach one”.
