The OPEC meeting is underway in Vienna and investors are waiting to see whether the oil cartel will agree on an output cut to stem two-years of low oil prices.
Ahead of the meeting Iran’s oil minister said he believed the Organization of the Petroleum Exporting Countries would clinch an oil-production deal, though he said the oil price would recover even if the cartel fails.
His country has been looking for a compromise that will spread cuts around different OPEC producers, rather than make Saudi Arabia be mainly responsible for curtailing output, report Benoit Faucon and Georgi Kantchev.
Hopes of an agreement prompted oil prices to rise in early European trading.
One major issue ahead of the OPEC meeting was what kind of limits Iraq and Iran would accept. Iraq has been boosting its production after years of violence, and Iran is just coming out from under Western sanctions.
Iran has told fellow OPEC members it would be willing to restrict its production in early 2017 after clawing back the market share under the sanctions.
On Wednesday Iranian Oil Minister Bijan Zanganehon said his country wouldn’t agree to stop ramping up its production in the short-term.
It isn’t clear how Saudi Arabia will react to Iran’s proposal. Tehran is on the opposite side of Saudi Arabia in violent conflicts in Syria and Yemen.
Iraq softened its position ahead of the gathering.
In last-minute negotiations, Iraq said it would hold its output steady to secure an agreement to prop up oil prices with OPEC.
THREE POTENTIAL SCENARIOS FOR THE OPEC MEETING
Analysts have largely settled on three possible scenarios for what OPEC’s meeting may yield.
Each scenario has different implications for the price of crude and the rebalancing of the oil market.
The oil cartel,which controls a third of the world’s production, could fail to strike a deal, succeed and impose a meaningful output limit, or come up with a face-saving agreement that states a production limit but doesn’t implement it.
Ahead of the meeting, Saudi energy minister Khalid al-Falih said he’s comfortable no matter what happens, since even if talks fall apart, he says the oil price will recover.”I am not concerned about a no agreement scenario,” he said.
Brent crude, the global oil benchmark, rose 5.7% to $50.02 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 5.3% at $47.61 a barrel.
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Headline crude prices for the week beginning 16 September 2019 – Brent: US$69/b; WTI: US$63/b
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