Hopes that, during the informal talks in Algiers, oil producing countries may reach an agreement to limit output in order to balance the market and boost prices, are fading. The distances between Saudi Arabia and its historic rival, Iran, simply remain too wide.
A possible agreement in November
''Iran is not ready to conclude an agreement in Algiers on the freezing of crude oil production'', stated Tehran’s oil minister, Bijan Namdar Zanganeh, on the eve of the informal meeting of the OPEC countries. "Reaching an agreement in two days is not on our agenda. We need time and more extensive consultations", added the minister, observing that an agreement could be reached during the summit in Vienna on November 30. On the other hand, its Saudi counterpart, Khalid al-Falih, also reminded reporters this morning that the meeting in Algiers is only a ''consultative meeting''. ''We will consult with everyone'', he said, ''we will listen to various points of view, we will listen to the secretariat of OPEC and also consumer countries''. Al-Falih was also optimistic regarding the oil market: ''The market'', he explained, ''is going in the right direction, slower than we hoped a few months ago, but the fundamentals are moving in the right direction. There will be a rebalancing of the market but more time will be needed than we hoped''. Its speed, added the minister, also depends on a possible agreement on production. If there is a consensus on one in the next few months, Saudi Arabia will be with the consensus view''.
The positions of Riyadh and Tehran
A consensus that, for the moment, does not seem within reach due to the irreconcilable positions of Riyadh and Tehran. According to rumors circulating last week, Riyadh would be willing to reduce its crude oil production provided that Iran is willing to freeze its production. This would be a step forward for the Kingdom which has previously always refused to discuss cuts in output. Tehran, whose production stands at 3.6 million barrels a day, continues, however, to defend its right to increase it to 4.1-4.2 million barrels; while the OPEC countries in the Gulf would like this to remain under 4 million. Russia’s energy minister, Aleksandr Novak, is today expected to meet Zanganeh in an attempt to persuade him to collaborate. In this sense, pressures on Iran are also expected to come from Qatar and Algeria, but, at this point, the possibility of an agreement being reached tomorrow appears very remote.