Iran supports every measure by the Organization of Petroleum Exporting Countries (OPEC) for restoring stability in the market and bringing crude oil prices to a fair and logical level, said Iran’s OPEC Envoy Mehdi Asali.
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“There is very low expectations for anything constructive to come out of this meeting”, Angus Nicholson, a markets analyst in Melbourne at IG, said by phone.
“For a market that was seeing higher runs and a loss of 1.2 million barrels a day of crude production from Canada, West Texas (crude) is not tight at all”, said Scott Shelton, broker with ICAP in Durham, North Carolina.
OPEC ministers gathering in Vienna for the group’s biannual meeting said the oil market is moving in the right direction as a supply glut dissipates.
Saudi arch-rival and OPEC member Iran said the country was not yet ready for an output pact, but several OPEC sources said the atmosphere inside the group had improved and a compromise was possible. Since then, non-OPEC output increased by about 6 mb/d, while the Cartel’s production level is now stood at around 32.3, including 730,000 b/d is Indonesian production, which returned to OEPC recently.
OPEC failed to agree to an output freeze at an April meeting in Doha, Qatar, after Saudi Arabia insisted Iran join the plan.
Saudi Arabia’s new Energy Minister Khalid al-Falih had his work cut out trying to convince poorer OPEC members that the kingdom was listening to their concerns, Croft said.
Brent crude futures traded at $49.50 a barrel yesterday, while WTI crude futures reached $49.42/Bbl, ahead of an OPEC meeting on Thursday, in Vienna, Kallanish Energy reports.
Many Middle East oil producers have ramped up deliveries to Asia in an aggressive fight for market share.
Iran exported just over 2 million barrels of oil every day last month and this number is predicted to double, as they are now producing around 3.8 million barrels a day. Militant attacks have cut Nigerian supply to the lowest level in more than two decades.
Despite this, prices of oil have rallied more than 21 pct or almost $10 a barrel since early April as a result of disruptions in oil supply across the world, especially in Canada and Africa. “When the circumstances are removed, what is going to happen?”
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If a freeze that includes Iran were agreed, and if it pushed up prices due to more bullish market sentiment, prices might get “too high, too quickly”. “He also knows the ropes at Opec”, a senior industry source with close ties to Nigeria said, but added: “Don’t expect any fireworks, either positive or negative”.
