OPEC tries to reach a deal on oil cuts

According to media reports, OPEC officials are working on the details of their oil cut plan. It is stated that they are very close to finalizing the discussions of limiting oil supply. If they reach an ultimate agreement, it will be the group’s first decision about a supply cut since 2008.

In Algeria, on September 28, OPEC had already agreed to limit oil supply, but with some special conditions, to countries such as Libya, Nigeria and Iran, whose output was badly affected by wars and sanctions for years.

Sources highlight that there are still many barriers to overcome. Iran’s level of oil production is a major issue, some analysts stated. Officials from the Oil Ministry say that Iran wants to raise its 3.9 million barrels/day oil production to 4 million barrels/day while other OPEC members want Iran to provide supply at about 3.7 million. Several OPEC sources say that this conflict caused tension at the meeting held in Vienna on October 28.

Iraq is not willing to agree on the deal either, according to sources, and it refused to lower its the oil production as it seeks to regain the output it has lost for years due to wars and conflicts in the region.

Analysts argue that OPEC wants to agree on an oil price in the range of $50-60 per barrel and cut the production modestly, between 600.000 and 1.1 million barrels a day, in order to speed up the rebalancing process. However, the oil market is not optimistic and they do not believe the group will be able to specify how much each member should cut their oil production when they meet in Vienna on November 30.

Another failure to reach an agreement could mean another drop in oil prices toward $40 a barrel, according to some analysts.