A crude oil production agreement is now unlikely this month. An agreement to reduce crude production would have helped to reduce a global glut of crude oil and keep prices up. The meeting had hoped to come to some form of agreement on oil production levels prior to the official OPEC meeting next month. A drop in crude price was expected once it became apparent that the Algeria meeting between OPEC and non-OPEC oil producing countries would fail to cut output. Oil prices fell by 3% Tuesday.
An agreement regarding crude oil production limits is not going to happen. Too many countries and delegates have stated this. Russia and Saudi Arabia had seemed confident prior to the meeting, but the Iranian oil minister was very negative. Bijan Zanganeh, Iranian Oil Minister, stated that ‘this is not the time for decision making.‘ If this is not the time, then what is?
He said that “We will try to reach an agreement for November.” This statement refers to the November 30 meeting of OPEC in Vienna. His statement did nothing to give any confidence to onlookers and reporters, neither did it appear to intend to. Iran’s view on oil prices is that the country will not change its production policy until its output at least equal to that prior to the sanctions imposed on Iran in 2012.
Without a crude oil production agreement, prices will not increase. Oil prices are now at about 50% of the high in 2014. Because of the pessimism regarding the likelihood of an oil price deal soon, prices have begun to drop again. Brent Crude futures dropped 3.2% to $54.80 barrel while East Texas Intermediate crude dropped to $44.38 – 3.4% down.
A freeze on output of crude oil has been discussed between oil producers, although that is also unlikely to lead to anything until the November meeting. However, the differences between the OPEC nations on this issue are becoming fewer. Nevertheless, it is highly unlikely that an agreement will be reached at the meeting starting 1400 GMT today (Wednesday.)
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