Oil prices drifted between gains and losses on Tuesday, as investors remained skeptical about a proposed plan by Russian Federation and Saudi Arabia to put a cap on crude production.
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On Monday, Brent, the global price for oil, rose as high as $49.40 a barrel on news of the pact, before falling back to $47 once investors realized the deal was lacking details.
Even now, oil prices continue to trade below $50 per barrel; West Texas Intermediate at $44.92 per barrel and Brent crude at $47.43 per barrel down 0.42%.
Oil prices fell 2 per cent on Tuesday, falling further from the previous session’s one-week high on receding hopes for an agreement between the world’s top two producers to freeze output to tackle a global supply glut.
Iran, however, signaled on Tuesday it was prepared to work with Saudi Arabia and Russian Federation to prop up oil prices as it began to bargain with OPEC on possible exemptions from output limits.
“However, the prospects for a deal appear to have receded in recent days as comments by Russia’s government (including the Energy Minister and President) that it would not support a deal, have subsequently been changed to indicate that a deal would need a carve out exemption for Iran”, analysts said in the weekly Oil Market report, obtained by Trend. However, the rally quickly fizzled as investors began to doubt the viability of a production freeze.
Falih and Novak said they will act together or in cooperation with other oil producers and agreed to set up a joint monitoring group to offer recommendations to prevent price fluctuations, Fritsch said.
An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran’s refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus.
Oil prices have almost doubled their lows since January. According to a survey by Bloomberg, oil production of OPEC members in August was up 120,000 barrels of oil per day reaching to record highs at 33.69 million barrels per day. Iran is expected to oppose any output freeze.
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In Europe, the regional statistics agency reported Tuesday that seasonally adjusted gross domestic product for the countries that use the euro currency increased 0.3 percent during the second quarter, compared with a 0.5 percent gain in the first quarter.
