In late European trade, Brent crude fell 1.8% to $48.13 a barrel. Organization of the Petroleum Exporting Countries (Opec) officials were scheduled to meet with non-members including Russia on Monday before a ministerial meeting in Vienna two days later.
Instead, the group called another internal meeting to try to resolve its own differences, particularly the question of whether Iran and Iraq are willing to cut production, said two delegates, asking not to be identified because the talks are sensitive.
Saudi Arabia wants an Opec deal in place before conversations with other producers, one delegate said. The setback suggests that Saudi Arabia remains split from its two biggest Middle Eastern rivals at Opec. Iran insists it should be allowed to restore output to pre-sanctions levels, while it remains unclear if Iraq is still disputing the Opec supply estimates that would provide the basis for any cuts.
With less than a week until the crucial ministerial meeting, the refusal of just one major producer to participate could scuttle the whole agreement reached in September in Algiers.
“The whole Algerian deal wasn’t clear from beginning and their approach was ‘leave it to later’,” said Abdulsamad al-Awadhi, a former Opec official for Kuwait who is now an independent analyst in London. Two months after the initial accord, “Opec leaders are confused and the group’s founding members can’t solve differences, but they want to have a deal with non-Opec. This a tough call.”
In September Opec agreed the outline of its first production curbs since the global financial crisis in 2008. Since then, the group has spent two months trying to agree how to share the cuts, which would bring its production to a range of 32.5m to 33m barrels per day.
Opec estimates it pumped 33.6m barrels a day last month. Technical experts from member countries met in Vienna this week to finalise details of the cuts.
After two days of meetings, the talks concluded without resolving the issue of Iran and Iraq. Ministers from Saudi Arabia and Iran will not arrive in Vienna until Tuesday, leaving little time for them to hold talks before the big meeting.
Capital Economics in London said it expects some “face-saving deal but for it to have little material impact on supply”.