Iran dims hopes for deal on oil freeze this week

Jamaica Gleaner - - BUSINESS - – AP

IRAN PLAYED down hopes Tues­day that a deal to limit oil pro­duc­tion will emerge this week in a meet­ing in Al­ge­ria, prompt­ing big falls in oil prices.

Speak­ing in Al­giers at a meet­ing of oil-pro­duc­ing coun­tries, Ira­nian Petroleum Min­is­ter Bi­jan Nam­dar Zan­ganeh said an in­for­mal gath­er­ing of OPEC min­is­ters on Wed­nes­day is “just a con­sul­ta­tion meet­ing ... If there is a de­ci­sion, it should be taken at the next (OPEC) meet­ing in Vi­enna in Novem­ber.”

In the wake of his com­ments, the United States con­tract for crude oil was down US$1.29, or about 2.8 per cent, at US$44.64 a bar­rel, hav­ing traded roughly flat ear­lier in the day. Brent, the in­ter­na­tional stan­dard, was down US$1.31, or 2.8 per cent, at US$46.04 a bar­rel.

Iran is likely to play a piv­otal role in any de­ci­sion by the Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries to limit pro­duc­tion in an at­tempt to get oil prices higher. The coun­try has sharply in­creased out­put since in­ter­na­tional sanc­tions over its nu­clear pro­gramme were lifted ear­lier this year as it looks to re­cover mar­ket share.

Saudi Ara­bia, the world’s big­gest oil pro­ducer and Iran’s ri­val within OPEC, ap­pears to be more amenable to some sort of pro­duc­tion limit, cer­tainly more so than in April when OPEC failed to agree on mea­sures to curb sup­plies.

Saudi En­ergy Min­is­ter Khalid Al-Falih promised to “sup­port any de­ci­sion aimed at sta­bil­is­ing the mar­ket”.

Oil prices are far lower than where they were a cou­ple of years ago. After shoot­ing up to over US$100 a bar­rel in mid2014, they be­gan a slide down to below US$30 at the start of this year.

A num­ber of fac­tors have weighed on prices, in­clud­ing wor­ries over the scale of the eco­nomic slow­down in China. High sup­ply lev­els from OPEC coun­tries, no­tably Saudi Ara­bia, as they seem­ingly strove to drive US shale gas pro­duc­ers out of busi­ness, were also cen­tral to the de­scent.

Though low oil prices have cer­tainly driven many out of busi­ness, they are hurt­ing the fi­nances of all pro­duc­ers, no­tably the likes of Venezuela and Nige­ria.

One po­ten­tial ally for Saudi Ara­bia is Rus­sia, the world’s num­ber two pro­ducer. Ear­lier this month the pair said they would act to­gether to sta­bilise global oil out­put. De­tails though re­main vague.

Rus­sia is not an OPEC mem­ber but the coun­try’s en­ergy min­is­ter, Alexan­der No­vak, is in Al­giers for the meet­ing of oil pro­duc­ers. He said he will meet with his Ira­nian coun­ter­part to dis­cuss “po­ten­tial co­or­di­na­tion and ac­tions on the mar­ket,” ac­cord­ing to the Tass news agency.

De­spite shrink­ing hopes for a deal on freez­ing out­put lev­els, Al­ge­rian Prime Min­is­ter Ab­del­malek Sel­lal urged par­tic­i­pants to over­come their dif­fer­ences to reach a “bal­anced price”. And Al­ge­rian En­ergy Min­is­ter Noured­dine Bouterfa re­mains op­ti­mistic.

“The lead­ers of OPEC are aware of the fact that the cur­rent sit­u­a­tion is no good for any­one. We are con­fi­dent there will be an ac­cord to­mor­row,” he told The As­so­ci­ated Press.

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