Oil edged up on Wednesday partly thanks to a weaker US dollar, but the limited likelihood of a near-term agreement among the world’s biggest exporters to tackle a global surplus by curbing production kept gains in check.
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Russia, which is not a member of the oil producing nations’ group OPEC, this year supported calls to freeze production, but the efforts fell through after OPEC member Iran opposed the plan.
The meeting is the first known gathering that Saudi energy minister Khalid al-Falih has held with a fellow member of OPEC since a new round of talks around production issues began in early August.
Oil prices have moved nearly daily depending on the public musings of Saudi and Iranian officials, rising at hints that differences can be put aside, falling when political rivalries reassert themselves.
The U.S. oil benchmark moved higher Tuesday, with analysts continuing to give credit for the advance to a pact between the world’s two largest crude producers, Russian Federation and Saudi Arabia. “There is still a question whether they can cut production for a sustainable period”.
Analysts said a large decline in USA gasoline stocks also supported oil. Iran played a key role in destroying the production cap agreements in Doha, but their positive attitude this time is helping in boosting traders’ optimism over the expected deal amongst OPEC producers.
“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. “We are ready, if there is such a decision, to join” an oil output freeze, TASS news agency cited Novak as saying.
The Organisation of the Petroleum Exporting Countries and non-Opec producers such as Russian Federation will hold informal talks in Algeria on Sept 26-28, but many in the market are skeptical a deal will happen.
Saudi Arabia insisted that all producers should participate in any joint action, which led to the collapse of the talks, since Iran was unwilling to take part.
“Even if successful, an Opec freeze would likely be a short-term positive but a medium-term negative for oil prices”, Morgan Stanley analysts wrote in a note.
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Tehran says it has doubled its exports of oil and gas to 2.7 million barrels per day (bpd) since signing a nuclear deal with world powers that ended sanctions in July past year.
