Crude prices rebound after Algeria’s energy minister said all options were possible for an oil output cut or freeze at this week’s informal meeting of OPEC producers. Ciara Lee reports
Iran downplays oil deal chances
All options open – that’s the message coming from Algeria as it plays host to the world’s largest oil producers.
With Saudi Arabia and Iran looking no closer to a deal on whether to freeze production, the market has been on shaky ground with prices falling nearly five percent in recent days.
(SOUNDBITE) (German) HEAD OF CAPITAL MARKETS ANALYSIS AT BAADER BANK, ROBERT HALVER, SAYING:
“OPEC is cannibalising itself. The two OPEC countries Iran and Saudi Arabia are in combat mode. They don’t want any cuts to output because Iran wants to keep all the income from the oil business, and the Saudis want to keep Iran as far away as possible so they too are pumping out oil at full capacity.”
Algeria says there is a desire to stabilise the market – and it’s shared by all members.
But they’ve got a lot of convincing to do.
(SOUNDBITE) (English) CHIEF ECONOMIST AT PANMURE GORDON, SIMON FRENCH, SAYING:
“The challenge of course is that so many investors have banked on the idea that these are fairly historically low oil prices and a kind of mean reversion trend heading back to 65/70 dollars. Clearly if it isn’t the fundamental stimulus to move that, then some of those bets start to be unwound, which can introduce heightened volatility. I think there is a lot of signaling to be done from OPEC.”
OPEC last reduced supply in 2008 when the global crisis crippled demand.
Signals have been mixed so far on whether a deal to cut or freeze production will ever happen.
Sources told Reuters that Saudi Arabia had offered to reduce production if Iran caps its own output this year.
So far Tehran has downplayed any chance of a deal this week.