The Organisation of Petroleum Exporting Countries announced earlier this week it will hold informal talks on the sidelines of a conference in the Algerian capital next month.
Saudi Arabia, the world’s largest crude exporter, told Opec it boosted oil output to a record 10.67m barrels a day in July, according to sources.
Iran’s output is up to 3.85m barrels a day, Fars news agency reported, citing Oil Minister Bijan Namdar Zanganeh. That’s the highest since 2008.
“It only gives one signal to the markets that the Saudis are not here to scale back, especially in the face of Iranians bringing more oil to the market,” Abhishek Deshpande, an analyst at Natixis in London, said.
“I doubt there’s going to be any concrete agreement despite there being talks,” he said.
Saudi Arabia typically pumps more oil in the summer to meet higher domestic energy demand from air conditioning. The kingdom is also engaged in a battle for market share with rival Iran and has cut prices to its customers in Asia, the biggest market for both exporters.
Opec’s smaller producers, which have driven calls to cap the group’s output, could only look on as prices tumbled more than 50% since mid 2014.
The last effort to freeze output in April, which also included non-Opec producer Russia, collapsed after Saudi Arabia demanded that Iran be part of the deal.
Iran still opposes any limits on its production, with the country seeking to reclaim its pre-sanctions share of Opec’s total output before contributing to any production freeze, according to an Opec delegate who asked not to be identified.
Weakness in global oil markets, which has dragged prices to a three-month low, may persist as demand slows seasonally and fuel inventories remain abundant, Opec said in its monthly report yesterday. Brent futures traded at $45.16 (€40.42) a barrel yesterday, having sunk to $41.51 on August 2.
Opec nations aren’t pushing to revive the aborted April proposal, two delegates from the group said last week, and analysts don’t expect any deal to be reached.
“These planned OPEC discussions may be viewed by some as a cheap possibility to try and stabilise the market,” said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.
“It’s more likely to be a way of further destroying the market’s confidence in Opec, as the organisation cries wolf once again.”