OPEC to debate oil output cut next week but Iraq, Iran hesitate

OPEC estimates it pumped 33.6 million barrels a day last month, meaning a 900,000 barrel cut would place production in the middle of that range.

The continuing questions around Iranian and Iraqi production don’t make a deal impossible next week, the delegates said, asking not to be named because the talks are private.

Traders said market activity was low due to the USA holiday, and there was a reluctance to take on big price directional bets due to uncertainty about a planned oil production cut, led by the Organization of the Petroleum Exporting Countries (OPEC). The price for Brent crude oil, which this week flirted with $50 per barrel, was down 0.6 percent to start trading at $48.83 per barrel. They also want to sell as much oil as possible in the short term to bolster their depleted budgets. The two countries are OPEC’s second and third-largest members.

Brent oil futures were trading slightly up at around $49.2 per barrel at 2010 GMT, having lost most of their earlier gains of around $1 a barrel. The group agreed to a collective production cut of between 32.5 million and 33 million barrels a day in September, saying it would work out individual quotas before its November 30 summit.

“An agreement is imminent by OPEC countries to freeze and reduce production, balance the market, and raise prices in a realistic, fair and responsible manner”, Maduro said in a speech to workers of state oil company PDVSA.

OPEC’s own estimates, based on what it calls “secondary sources”, are usually lower than countries’ direct submissions to the organization. “I would be very surprised if we don’t see a cut next week and price moving to $55 a barrel”. Iran insists that it should be allowed to maintain or increase production to return to levels achieved before the imposition of sanctions on the country that were lifted in January. Opec disputes that figure and puts Iraq’s production for that month at less than 4.5 million barrels daily.

Doubts over the possibility of the oil cut deal regained its dominance in the energy market as worries about internal disputes within OPEC strengthened following the technical conference in Vienna. With its recent debt issuance of $17.5 billion, and a much-anticipated Aramco partial IPO on the horizon, markets are looking for the Kingdom to take charge and show that it still holds sway in world oil markets to move the price.