Iran and Iraq Push Back on Saudi Oil Production Pressure

Crude oil prices fell in early Asia trade Monday after Saudi Arabia said it wouldn’t meet with Russia-which isn’t a member of the Organization of the Petroleum Exporting Countries-ahead of the OPEC summit in Vienna.

WTI light sweet crude oil was down 20 cents at $45.88 a barrel, with analysts saying prices could fall much further unless an OPEC deal is reached. Brent crude was down over 50 cents at $46.73 per barrel, while the USA benchmark West Texas Intermediate slid 55 cents to $45.51.

Iran, free to export oil since last year’s nuclear deal, won’t cut production until it has reached pre-sanctions levels. Keep updated on the oil price market with us.

On Sunday, Saudi energy minister Khalid al-Falih said that even if OPEC doesn’t step in to control production, the oil markets should balance out in 2017 on higher demand.

Even a full OPEC cut will not restore crude prices to the levels over $100 that a barrel fetched in June of 2014, before increased output from the USA and other non-OPEC countries led to oversupply.

Oil stocks were generally flat to lower Monday, after not reacting much to Friday’s big oil price sell-off.

Even without an agreement, however, Wood Mackenzie said Brent crude oil prices would still gain slight ground through the second half of 2017, but stay below the psychological threshold of $50 per barrel.

Despite the disagreements among producers, Morgan Stanley said it still expected “at least a paper deal agreement”.

Goldman Sachs Group Inc. said in a November 21 report that it expects oil prices in NY to rise to an average $55 a barrel during the first half of 2017 – from $45 and $50 for the first and second quarters previously – on an assumption that OPEC will agree to cut output to 33 million barrels a day and that Russian Federation will freeze.

“It’s not beneficial to attend the meeting with producers from outside OPEC before holding meetings within OPEC and deciding whether to cut or continue with current levels of production”, Al-Falih said to Asharq Al-Awsat. Goldman Sachs Group Inc. said the market is pricing in a 30 percent chance of a deal. Crude futures rose by 5% in response, but the deal has yet to be ratified.

But futures later rebounded on signs other OPEC members are making a last-ditch effort to save the deal. A 10-hour technical meeting focusing on how to divide cuts failed to resolve differences, with Iran still aiming to produce roughly 7 percent more than a level proposed by Saudi Arabia.

Its US counterpart, West Texas Intermediate, was up 0.5 per cent at a little below $48.50 a barrel, a rise of more than 15 per cent from its nadir last Tuesday.

Analysts say U.S. President-elect Donald Trump is a wild card for the oil market longer term, in more than one way. It was the most significant decrease in the raw material from two months ago, after Saudi Arabia said it would withdraw from talks on freezing oil production on Monday between the non-OPEC countries.