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Iran confirms OPEC meeting attendance, a freeze deal unlikely

Entrance of the OPEC Headquarter in Vienna. Wikimedia/Vincent Eisfeld

Oil prices reversed their losses yesterday after Iran ended the speculation by announcing that it would join the informal meeting among the OPEC members to be held on the sideline of International Energy Agency’s (IEA) biennial meeting in Algeria. There has been a wide range of speculations this week. There has been a false report in Reuters saying that Iran has been sending out signals of cooperation. The report was officially denied and Iran refused to confirm its attendance. The oil price declined after that, only to revive after official confirmation.

Iran has been ramping up production since last year after the western countries chose to remove sanctions against the republic. Production has now reached the levels of 3.85 million barrels per day, but it is still lower than pre-sanction level, which was above 4 million barrels. This is one of the reasons, why the freeze deal is unlikely. In addition to that, Saudi Arabia’s energy minister Khalid al-Falih, who previously said that he is ready to talk on cooperation if needed. However, speaking to Reuters, he said yesterday, as of now there has been no discussion of substance with regard to OPEC’s production level and said that he believes as of now there is no need for a significant intervention in the market, especially since the demand growth has been picking up all over the world.

In recent weeks, some of the OPEC producers, once again led by Venezuela have been making renewed attempts for quota system but as the large producers remain engaged in a fight for the market share, a deal is very much unlikely. The previous attempt failed in April over Saudi-Iran rivalry.

WTI crude is currently trading at $47.4 per barrel and Brent at $2.1 per barrel premium to WTI.

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