An informal Opec meeting next month is unlikely to deliver any agreement to limit production because several members including Iran are still pumping below capacity.
Members of the Organisation of Petroleum Exporting Countries (Opec) are planning to hold talks in Algeria next month when they gather for a meeting of the International Energy Forum, the group’s president Mohammed Al Sada said earlier this week.
However, the same obstacles that prevented an agreement on proposals to freeze output in April or fix a new production target in June are still there, according to UBS Group.
“We still haven’t reached the moment when Opec members will agree to a production agreement, as Iran has not yet recovered its pre-sanction production levels,” said Giovanni Staunovo, an analyst at UBS.
Oil fell into a bear market last week, ending a recovery that saw prices almost double from a 12-year low in February.
Opec moved to targeting market share over price in 2014, adopting a Saudi-led strategy to keep pumping in the face of oversupply.
Efforts by some Opec members over the past two years to limit the group’s output have come to nothing.
In Doha in April, talks with other producers including Russia to freeze output ended in failure after Saudi Arabia decided it wouldn’t back the accord as long as Iran refused to join.
Iran’s position on a freeze accord has not changed, with the country seeking to reclaim its pre-sanctions share of Opec’s total production before agreeing to cap output, according to an Opec delegate.
Iran’s crude production increased by about a quarter since the start of the year to 3.6m barrels a day in July. However, it has yet to fully recover the levels pumped before sanctions were imposed four years ago.
Crude production in Libya remains at less than a quarter of its level before the ouster of Muammar Gaddafi in 2011.
In Nigeria, a resurgence of rebel attacks against oil infrastructure is holding output close to the lowest level since 1989.
Holding an informal meeting is an opportunistic, low-risk strategy for Opec to deal with the problem of falling prices, said David Fyfe, head of research at oil trading house Gunvor Group in Geneva.
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