From the Field
Oil production cut deal uncertain
ISTANBUL, October 10, 2016 – Despite comments by Saudi Minister of Energy Khalid Al Falih, who voiced optimism on Monday that a production cut could bring prices up to USD 60 a barrel, many analysts remained skeptical that OPEC and non-OPEC producers could reach a deal during the World Energy Congress in Istanbul this week.
In early-day trade oil prices remained around USD 50 a barrel, reversing an upward trend that ended Friday with Russian Energy Minister Alexander Novak voicing doubts about an imminent deal.
Last week’s gains had come after a tentative agreement by the OPEC members on September 28 to reduce output by 200,000-700,000 barrels per day, contingent on talks with non-OPEC members such as Russia.
But on Sunday, that consensus had seemingly started to unravel, with OPEC’s second-largest member Iraq announcing planned production increases next year and Reuters reporting that both Iraq’s and Iran’s oil ministers were planning to boycott the talks.
Despite his optimism, Al Falih seemingly acknowledged these uncertainties, telling the Wall Street Journal in an interview that OPEC needed to remain flexible and to try to reach an agreement with the holdouts.
“I think a band would be able to make sure the ceiling can accommodate,” he added. “OPEC needs to make sure we don’t kill too much and create a shock.”