Saudi Arabia lowers oil pricing before OPEC meets

The Opec delegate said agreeing cuts before Iran is producing to its full capabilities would “not work”, with Tehran estimating it can raise output by 500,000 to 1m b/d next year.

The U.S. Energy Information Administration (EIA) said U.S. commercial crude inventories unexpectedly rose by 1.2 million barrels over the previous week.

Crude oil is trading in the red this morning at 41.59 down by 26 cents while Brent oil dipped just 4 cents to 44.26.

Oil minister Bijan Zanganeh has said Iran will boost its crude exports by 1 million b/d within six months of lifting of the lifting sanctions, which, according to some Iranian officials, could be as early as January 2016.

“Quantitative easing programs around the world have pushed up prices of risk assets, so it certainly won’t do potential upside for oil too much harm”, said Brun. The sanctions have restricted Iranian oil shipments and analysts say their return to the market will further add to the crude oversupply.

Saudi Arabia has thrown down a challenge to big rival oil producers ahead of this week’s Opec meeting, saying it would back output cuts as long as they were supported by countries both inside and outside the cartel.

OPEC has been pumping above its collective target of 30 million barrels per day as its influential members led by Saudi Arabia try to maintain their share of a highly competitive market.

Brent crude Wednesday fell to $42.49 per barrel, anf the chronically low prices are reported to have created financial challenges for Nigeria.

A meeting by the Organization of the Petroleum Exporting Countries (OPEC) this Friday in Vienna is not expected to bring a change in the group’s policy, which has seen it keep output high in an effort to defend market share against other producers like Russian Federation and North America. However, he said it was unlikely that Saudi Arabia and its allies would reduce output. Oil production already exceeds demand by 0.5-million to 2-million barrels a day.

Strong data will strengthen expectations of the Federal Reserve raising US rates this month – the first upward move in almost a decade.