Oil prices inched lower on Wednesday as market participants remained skeptical that producers will reach an agreement to freeze output to rein in a global supply glut.
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“As soon as we come back to pre-sanction levels, we will be ready to discuss quotas and level of production”, Ghamsari said. Iran hopes to receive the first bids as early as October and aims to lift output to 5 million barrels a day within two or three years – at least 1.3 million barrels a day above what it was in 2010, the year before new sanctions were first proposed, and the highest since 1978 as the Islamic Revolution gathered pace, according to data from the Centre for Global Energy Studies.
“One would say that there is a distinct chance in the next six months that we do get into some of the inventory, which would act as a catalyst for investors to increase exposure to the oil market” When supply is expected to outstrip demand in the longer term, buy, or “call” options tend to be cheaper than sell, or “put” options as investors generally bet on the greater likelihood of oil prices falling rather than rising. Saudi Arabia and Russian Federation, the world’s biggest producers, this week pledged to cooperate to stabilize global markets, while failing to announce any specific measures. Perhaps it’s the the 4.064 million barrels a day that the country produced in 2008, according to its submissions to the Joint Organisations Data Initiative.
Wildfires in the Canadian region of Alberta in May cut the country’s daily output by 1 million barrels and were one of the factors that pushed oil prices to a six-month high.
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 have since fallen due to uncertainty over a deal, particularly after a meeting in Doha in April among the world’s largest producers to discuss output ended in failure.
“The prospects of any agreement on production caps being reached that will genuinely help the oil market could not be slighter”, analysts at Commerzbank said in a report. The price of oil rose responding to a weakening U.S. dollar – but gains were limited by continuing doubts over whether the major producers will agree to curb their production any time soon. In this scenario, Iran may not pose any hindrance this time around and OPEC may agree to an output control talk in Algeria.
West Texas Intermediate, the U.S. marker, was 1.6 per cent higher at US$46.21 a barrel in NY.
The US and European Union tightened sanctions on the Islamic Republic in 2012 over its nuclear program.
Iran has said it would cooperate in talks to freeze output only if fellow exporters recognised its right to regain market share after the lifting of worldwide sanctions in January under a nuclear deal with six major powers.
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This flies in the face of what the producers are actually saying, and in what they are doing as well, given OPEC actually raised output in August by 40,000 bpd from July, taking it to a record 33.5 million bpd.
