On Tuesday, Iran and Saudi Arabia ended any hopes that oil producers in OPEC would reach a deal that limits output this week in Algeria. Trusted sources within the oil producing cartel said the big differences between Tehran and the Kingdom were too wide to bridge.
This meeting is just consultative, as everyone will be heard including the consumers and the secretariat of OPEC, said Khalid al-Falih the Energy Minister of Saudi Arabia.
Bijan Zanganeh the Oil Minister of Iran said it was not the time to make decisions. He said that decision making would be at the next formal meeting of OPEC on November 30 in Vienna and at that time, an agreement will be attempted to be reached.
OPEC or the Organization of Petroleum Exporting Countries is holding an informal session on Wednesday. Members of the cartel are also meeting with producers who are not members of OPEC such as Russia.
Prices of oil have dropped by over half from levels of 2014 due to a glut in the supply, prompting producers in OPEC and their rivals Russia to seek a rebalancing of the market to increase revenues from the exports of oil and help their budgets that have been crippled.
The push since the early part of 2016 amongst producers has been to reach an agreement for an output freeze in levels, although those watching the market said such a move would be a failure when it came to reducing unwanted numbers of barrels.
Sources have said that Saudi Arabia offered to lower its overall output if Iran would freeze its production, a shift in the position of the Kingdom, as it previously had refused to talk about any cuts in output.
OPEC delegates on Monday said the positions of Iran and Saudi Arabia were too distant to come to an agreement. Oil prices dropped over 1% on Tuesday during trading.
Three sources in OPEC said that Iran, whose oil production has remained at 3.6 million barrels daily, insisted on being able to ramp that production up to over 4.1 million per day, while members of OPEC wanted to freeze Iran’s output at less than 4 million.
Another source that is close to the ongoing discussions said nothing will happen unless there is a sudden change made by Iran and it agrees to a freeze.
Russia’s Energy Minister is meeting with Zanganeh on Tuesday in what some sources said was another attempt to persuade Iran to freeze output.