Oil prices continue to seesaw as a result of the stetements coming from the the OPEC technical meeting in Vienna. The January contracs for WTI dropped 10 cents to $47.93/barrel, while Brent went down 10 cents to $49.02/barrel. The main reasons behind the decrease are once again Iran and Iraq. "We do not have a clear path to a decision on November 30, and that is what the market was looking for, so we are in for another eight days of uncertainty," said James Williams, president of energy consultant WTRG Economics in Arkansas (USA).
It will be a hectic few days for OPEC, which for weeks has been trying to establish a bridge for dialog with non-OPEC members in order to agree on a coordinated output freeze that will be sustainable for the market. With Russia having declared itself willing to block output at current levels (which are anyway the highest of 2016), all eyes are now on Iraq and Iran.
Another uncertainty are the quotas for individual states. While a global production ceiling will certainly be set by November 30, it is unclear what percentage each state will have to cut. Some countries, like Nigeria, Iraq, Libya and Iran, maintain that they should be let off the hook given the hits their output has taken due to conflicts and economic sanctions.
In the meantime, Saudi Arabia and Egypt are mending relations following Saudi Aramco’s move to halt supplies to the latter. Tarek El Molla, Egypt’s minister of petroleum, was invited to participate in the 14th Arab International Mineral Resources Conference in Jeddah.
Saudi Arabia’s try at rapprochement with Egypt could exacerbate its already prickly relations with Iran but also might provide a way for the kingdom to find its own way out of the oil price crisis.