Yemisi Izuora/Agency Report
Oil OPEC and Russia are meeting in Doha on today for another round of talks without ministers from Iran and Iraq, the two countries that pose the biggest obstacle to a deal to cut production.
Members of the Organization of Petroleum Exporting Countries are “all hands on deck” to reach an agreement by the group’s Nov. 30 meeting in Vienna, Secretary-General Mohammed Barkindo said in an interview in Marrakech, Morocco on Tuesday.
Saudi Arabia, Iraq and Iran remain at odds over how to share output cuts, said an OPEC delegate, who asked not to be identified because the information isn’t public.
The latest round of diplomacy reflects OPEC’s struggle to finalize the deal reached in Algiers on Sept. 28, which would end a two-year policy of pumping without limits.
More than 18 hours of talks last month in Vienna failed to overcome internal disagreements, which in turn prevented a wider pact with non-OPEC producers. Without an accord, the International Energy Agency predicted a fourth consecutive year of oversupply in 2017.
Brent crude rallied to a one-year high following the announcement of OPEC’s preliminary accord to reduce production, but has since fallen back as doubts over the deal grow.
The international benchmark rose 5.7 percent to $46.95 a barrel Tuesday, the biggest gain since the surprise agreement in Algiers, as the fresh talks prompted speculation the group can overcome its differences.
“Freeze diplomacy continues in full swing,” Olivier Jakob, managing director of Zug, Switzerland-based consultant Petromatrix GmbH, said in a note .
“We think that Saudi Arabia wants to make sure that everything is done before the November 30th meeting.”
Russia will hold informal consultations with OPEC representatives, potentially including Saudi Minister of Energy and Industry Khalid Al-Falih, at the Gas Exporting Countries Forum in Doha on Nov. 17-18, Energy Minister
Alexander Novak told reporters in Moscow. There’s a high chance of an agreement by the Nov. 30 meeting and Russia is ready to support a decision, he said.
Neither Iran, Iraq nor Nigeria will send oil ministers to Doha.
Hamed Al-Zobaie, Iraq’s deputy minister for natural gas affairs, will represent the country, Oil Ministry Spokesman Asim Jihad said by phone.
Iran will send OPEC Governor Hossein Kazempour Ardebili and National Representative Behrooz Baikalizadeh, said an Oil Ministry official. Emmanuel Kachikwu, Nigeria’s minister of state for petroleum, won’t attend, said a person familiar with the matter.
Iraq has sought an exemption from joining any production cuts, arguing that its fight against Islamic State justifies special treatment. Iran has insisted it won’t accept any limits on its production until it has returned to the pre-sanctions level of about 4 million barrels a day.
The talks in the Qatari capital run alongside behind-the-scenes diplomacy, including an unannounced meeting in recent days in London between Barkindo and Al-Falih.
After traveling to Venezuela to meet with President Nicolas Maduro, OPEC’s top official will also visit Ecuador and Iran, two people familiar with the matter said.
“I have been encouraged and strengthened in my resolve to continue marching until we reach a final agreement” after meeting with Maduro, Barkindo said in Caracas.
“This current cycle is probably the worst cycle of oil markets that we have entered in the last 50 years.”
OPEC seeks an output cut among the group’s members, and talks with non-OPEC countries are far advanced, Maduro said. “We’ve been proclaiming the need for a new scheme for the stability of the oil market and prices and we are ready for the accord.”
OPEC pledged in Algiers to bring its production down to a range of 32.5 million to 33 million barrels a day, which compares with the group’s own output estimate of 33.6 million last month.
It’s also seeking cooperation from Russia and other non-members, although so far none have committed to curbing output.
Saudi Arabia, OPEC’s de-facto leader, is ready to cut production, but only if the effort is built around four pillars, said one delegate.
All members must agree to collective action, pledge to share the burden of cuts equitably, and do so in a way that is transparent and has credibility with the market. The latter can be achieved by using OPEC estimates of how much each member pumps, rather than relying on the countries’ own figures, the delegate said.
In practice, that means Saudi Arabia still thinks Iraq needs to cut output and Iran has to freeze production around current levels, the person said. Neither country has so far agreed to do that.
Three countries — Libya, Nigeria and Iran — have been granted “special considerations” to implement the Algiers accord, Barkindo said. Iraq is not among these members, he said.
In Libya and Nigeria, production is still recovering after a spate of violence and militant attacks targeted oil infrastructure.
Saudi Arabia, Iraq and Iran are the largest producers within OPEC, accounting for about 55 percent of the group’s output, according to data compiled by Bloomberg.