If the world’s biggest oil producers agree to freeze output when they meet in Algiers later this week, they must slash supply to support a protracted price rally, according to two-thirds of the 250 worldwide energy executives operating across the Gulf who participated in the GIQ poll on September 22.
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The meeting will be held at the fringe of the International Energy Forum in Algiers from 26-28 September.
Noureddine Bouterfa said there would be an informal gathering of Opec members on the sidelines of an energy conference in Algiers on Wednesday.
Sources also reported last week that Saudi Arabia has offered to cut production, but only if Iran agrees to freeze output at its current level of 3.6 million barrels per day.
Iran, who said it wouldn’t accept to freeze production until they reached pre-sanction levels of output, at around 4 million barrels per day “have now reached the cusp of pre-sanctions oil production levels at 3.6 million barrels per day and are managing to recapture their market share” according to Singh.
“Iraq’s oil policy aims at cooperating with the producers inside and outside OPEC to achieve the needed balance in supply and demand and the stability in the market”, he said in a statement released to the media.
As the pain of cheap oil grew and pressures on Saudi finances increased, Riyadh and Tehran signaled they were willing to show more flexibility to prop up prices.
Algeria on Sunday expressed optimism that an agreement could be reached by major oil producing countries to stabilize the world oil market.
Front month West Texas Intermediate crude oil futures dropped 3.97% to end the day at $44.48 per barrel on NYMEX.
“There’s a lot of nervousness about the meeting and that’s being reflected in the price action”, said John Kilduff, partner at Again Capital, a NY hedge fund focused on energy. In other news, the USA oil drilling rig count was up by 2 to 418, according to Baker Hughes.
The dollar came under pressure this week after the Federal Reserve decided against raising USA interest rates. “While recent rhetoric suggests a freeze deal has a fighting chance, on the ground realities make this outcome far from certain”, they say.
Saudi Arabia is the largest OPEC oil producer and exporter.
OPEC Secretary-General Mohammed Barkind said last week that the Algiers meeting will try to reach a consensus to freeze outputs for at least one year. Still, “they are also requiring that Iran back off their goal of 4 million [barrels a day] and stay at [roughly] 3.6 million”, he said. Iran is now producing close to 3.6 million barrels a day and will find it extremely hard to increase its production significantly beyond this level.
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Earlier, the market had been encouraged by another unconfirmed report that the Saudis were talking with Iran about a mutual deal to freeze production. This time around, many producers also have conflicting priorities, with Iran, Iraq and Nigeria determined to restore lost production, while Russian Federation and Saudi Arabia maintain near-record supplies. Saudi Arabia and Iran couldn’t agree on what statistics should be used to determine oil output levels for a potential “freeze” – the term used to describe a joint effort by big producers to limit their petroleum output at the current pace or lower.
