Oil prices dip on scepticism ahead of OPEC meeting

Another delegate, when asked about the prospects for a deal, said: “Nobody knows yet”.

Investors are still unsure whether the Organization of the Petroleum Exporting Countries will be able to hammer out a deal on Wednesday to freeze or cut production. But Iraqi Prime Minister Haidar al-Abadi later said Baghdad will “shoulder responsibility” for some of the cuts.

Combined with Ecuador, the three OPEC members have exported an average of ~850,000 bpd this year.

In September the cartel agreed in principle to lower production to 32.5-33.0 million bpd, meaning a cut of between 600,000 bpd and 1.1 million bpd from current levels. The deal is expected to be finalized with individual country quotas established on Wednesday.

Iranian semi-official news agency MEHR published an editorial on Sunday accusing Saudi Arabia of declaring a new “war on oil prices” and saying the Saudi position had changed because of infighting in the royal family.

Minister of Energy of Saudi Arabia Khalid al-Falih said that his country will take part in negotiations with producer countries outside OPEC, just after having completed the cartel meeting in Vienna on November 30.

If a large cut is announced, Croft said oil prices could soar to $55 a barrel or higher.

Many believe the chances of a significant OPEC supply cut are no better than 50/50. Crude futures rose by 5% in response, but the deal has yet to be ratified.

Oil prices have rallied since plunging to a 13-year low of $26 a barrel in February. We don’t need production deals or trade deals because reflation and stimulus are going to push demand and everyone wins. We have seen Iran before fail to attend a meeting in Doha that blew the production deal back in April. Keep updated on the oil price market with us. With sanctions lifted this year as a result of a nuclear agreement, Iran is looking to regain its market share within OPEC while pushing the Saudis to give up gains it says were made while Tehran was sanctioned.

Any rally beyond that would be “short-lived”, Croft said, because it would “open the door” for more pumping from non-OPEC producers, especially America’s increasingly-efficient shale producers.

During the session, Brent gained $1 a barrel, bringing it to within four cents of $50, its highest since October 28, 2016.

Exxon Mobil (XOM) fell 0.2% to 86.95 in early afternoon on the stock market today. EOG Resources (EOG) fell1.5%.

Welch noted that, a deal will be extremely challenging to deliver, given the political differences between members, particularly Saudi Arabia and Iran, and several OPEC nations actively trying to increase production – Iran, Iraq, Nigeria and Libya.

Meanwhile, oil ministers from Algeria and Venezuela were to travel to Moscow on today, ahead of Wednesday’s meeting, in attempt to convince Russian Federation to be involved in curbing rather than simply freezing output.

In September, OPEC agreed on targets that would have translated into production cuts of 200,000 to 700,000 barrels a day.