Oil price may have reached its near-term highest level

Hopes slim for a deal to cut production in upcoming Opec, non-Opec meeting in Algiers

Amid slim hopes of an oil output deal in Algiers this week, oil prices may witness a limited upside from here on.

In preparatory talks in Vienna, Saudi Arabia and Iran did not reach an agreement, according to media reports, including Saudi Arabia’s call to cut production return of an output freeze by Iran. All the Opec and non-Opec countries had called to stabilise the oil market, which is still battling with a surplus of 1.6 million barrels of oil per day.

“I am sceptical about the capacity of Opec members to The oil market is in “much more critical” shape than when Opec last met and its members must seek ways to stabilise crude prices, possibly by freezing or cutting output, Algeria’s energy minister said ahead of talks among the group’s members this week in Algiers. Saudi Arabia is willing to do its utmost to ensure the discussions succeed, the Algerian minister, Noureddine Boutarfa, said yesterday. work out a deal in this week’s meeting,” Francisco Quintana, Head of Strategy, Foresight Advisors told Gulf News by email.

Failed attempt

Opec (Organisation of Petroleum Exporting Countries) and non-Opec officials will meet from today to Wednesday in Algiers, after a failed attempt in April this year in Doha, Qatar, to strike a deal following differences between Saudi Arabia and Iran — which was trying to take back the lost market share.

Analysts are also not expecting much on the price front. “We maintain the view that the upside remains limited until we see clear signs of the glut being reduced,” said Ole Hansen, head of commodity strategy at Saxo Bank.

Oil prices, which hovered over $100 (Dh367) per barrel between 2011 and 2014, have fallen by more than half to be at around $50 due to rising supplies. On Friday, Brent crude tumbled 3.69 per cent to $45.89. Failure to act would return the focus to jump in production which carries the risk of seeing Brent crude trade below recent support at $45, potentially targeting $40, according to Hansen. Aberdeen Asset Management, too, expects prices to tumble — to $30 — in case there is no deal.