OPEC members are set to meet in Algiers next week, though a potential supply deal is less likely to happen following reports that Iran isn’t ready to freeze production at current levels. However, an agreement to increase prices may be reached in the near future, as Saudi Arabia for the first time in two years has signalled its willingness to limit production.
Riyadh and Tehran failed to reach a deal after two days of discussions in Vienna, in which Saudi Arabia offered to reduce production but only if Iran caps output at existing levels, according to several recently published reports.
Experts think the impasse between the oil producing countries in the Middle East reduces the prospects of any cooperation between OPEC and Russia to tackle a worldwide supply glut.
Head of commodities research at Citigroup Inc., Ed Morse said that ‘’it’s difficult to come to the conclusion that a freeze would be credible or doable.”
Saudi Arabia is ready to cut its production if Iran agrees to cap output at the present level, which is roughly 3.6 million, according to a recently published report by Bloomberg citing sources with the knowledge of the matter.
Riyadh produced a record 10.7 million barrels per day in August, representing a surge of 490,000 barrels per day from January, according to data released by Bloomberg.
Oil prices are currently hovering under $50 per barrel, significantly lower than around $100 per barrel in 2014, and the International Energy Agency is expecting the surplus could continue in 2017. In April, OPEC and Russia tried to reach a deal, which collapsed at the last minute when Saudi Arabia’s Prince Mohammed bin Salman insisted that Iran should also take part in a freeze. Iran refused to participate as at it just started boosting oil production after the end of international sanctions.