Oil up on Russia, Iran, Iraq comments
VIENNA, November 21, 2016 – Oil prices hit a several-week high on Monday after comments by Iran, Iraq and Russia suggested that a deal between OPEC and non-OPEC producers was likely to be reached next week in Vienna.
“Whether an agreement will be reached, I can’t say 100%, but there’s a strong likelihood that it will be achieved,” Russian President Vladimir Putin told journalists on Sunday. “The main contradictions within OPEC, if they’re not yet eliminated, can be eliminated.”
His words were echoed by Iranian Oil Minister Bijan Namdar Zanganeh, who voiced his confidence that “OPEC members [would] honour the agreement and would try to put it into action,” according to his ministry’s news service.
Last week, OPEC reportedly discussed an idea that Iran, which is exempted from the production cut talks due to international sanctions against its nuclear programme that were repealed earlier this year, would cap rather than cut its oil production.
Iraq, which has been seeking a similar exemption due to its ongoing war against the Islamic State, also signalled that it is ready for compromise, with its oil minister, Jabar Ali Al Luaibi, promising in a statement to “offer new thoughts and suggestions to bring the members closer to an agreement” at the November 30 meeting.
In response, Brent crude futures went up USD 0.60 to USD 47.46 on Monday morning, their highest level since November 2, even as analysts said concerns about whether a potential deal would be implemented properly persisted.
“We expect OPEC to agree to a face-saving statement,” analysts at Barclays bank told Reuters. “[But] US tight oil producers can grow production at USD 50-55 [per barrel] and will capitalise on any opportunity afforded to them by an OPEC cut.”