Oil prices hold steady before upcoming OPEC meeting

Oil prices hold steady before upcoming OPEC meeting

Emilio Fabio Torsello
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Despite the stability some countries are still increasing output, with Iran seeking to resume pre-sanction levels and Nigeria signing a supply deal with India

In the run-up to the OPEC meeting scheduled for November (and an informal one including the participation of non-OPEC members to be held during the coming days in Vienna), the price of oil is hovering between 50 and 52 USD per barrel. Meanwhile, US stocks have dwindled to 3.8 million barrels. This early data implies the validity of the announcement effect for oil prices and markets following the declaration by OPEC and non-OPEC members at the Algiers talks that they intend to limit output to 1 million bpd.
However, Iran is currently expanding its crude output, reaching 3.7 million bpd, half a percentage point more than the previous month and nearing the 4 million bpd it was producing in 2012, before international sanctions were imposed on that nation. This is one of the problems that will have to be tackled at the upcoming OPEC meetings. Tehran is dead set against limiting its crude output. On the contrary, its target is to produce 5.7 million bpd by 2021.
Further afield, Nigeria will raise its own output by 22% by the end of the year in order to fulfill a 15 billion USD supply deal it is about to sign with India. The African country is suffering from shrinking state revenues, while New Delhi for its part is looking to bolster its own stocks. OPEC has granted Nigeria a window within which to raise production from 1.8 to 2.2 bpd in order to combat the effects of the recession.