Oil prices tumbled about 4 percent on Friday on signs Saudi Arabia and arch rival Iran were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production.
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“They (the Saudis) are ready for a cut but Iran has to agree to freeze”, one source said.
The informal OPEC meeting is expected in late September in Algiers.
As was the case ahead of the April meeting in Doha, Qatar, comments from big oil producers have fed volatility in the market, with large price swings for crude oil in either direction becoming the norm since early August, when OPEC announced plans for the gathering.
“Anticipation of next week’s Algiers OPEC meeting has once again underpinned (oil prices) although the probability of an agreement is very low”, said Stephen Innes, senior trader at OANDA. OPEC’s next meeting is November 30, but there have been talks about the possibility of calling an emergency meeting before that, she said. In 2012, for instance, when a European ban on Iranian oil started to heavily hit its output, the Islamic Republic told OPEC it was pumping 3.7 million barrels a day, 800,000 barrels a day more than the estimate by secondary sources.
This year sees in the 8th Edition of SAOGE, the Saudi Arabia International Oil and Gas Exhibition, a testament to its place in the Kingdom’s industrial calendar.
But the Saudi offer revives the notion, as signalled by Riyadh and Tehran earlier in the year, that they could coordinate to support the market. Since then, the group has pumped without limits to protect market share from rival supplies including US shale oil, rather than cut output to support prices.
If agreed, such a deal would shift Saudi Arabia’s strategy of defending its share of the global market, despite falling prices, at the expense of other producing countries, especially those where oil production is more expensive.
Russian Federation pushed output to a record 11.09 million barrels a day in September, Energy Ministry data show.
In a speech Thursday before the U.N. General Assembly, Mr. Rouhani accused Saudi Arabia of sewing divisiveness across the Middle East, spreading “hate ideology and trampling upon the rights of neighbors”.
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Iraqi Oil Minister Jabar al-Luaibi has said in a statement that his country’s fixed policy will be to cap output at 4.75 to 5 million barrels a day in order to maintain a share of global energy markets.
