Oil prices surge on optimism over OPEC deal

The Organization of the Petroleum Exporting Countries (OPEC) will meet in Vienna on Wednesday to decide on the details of a cut, potentially including non-OPEC members like Russian Federation. The International benchmark Brent futures rose 1.92 percent to $48.15 and West Texas Intermediate (WTI) jumped 0.77 percent to $45.58 by 07:00 GMT.

After weeks of often tense negotiations, OPEC ministers gathering in Vienna expressed renewed optimism about salvaging a deal to cut oil production and prop up global prices.

According to Iran, they intend to increase production in order to regain their market share, which they lost under Western sanctions.

Razaqzada said that should OPEC come to an agreement, then oil prices would likely rise above $50 per barrel, and if the group failed to agree anything, prices would fall towards, though unlikely below, $40 per barrel.

Should a large output cut push through, Nordea analysts said that it could push oil prices closer to $60 per barrel before year’s end.

Most analysts expect some form of deal from the meeting.

“The sentiment generally is optimistic and positive”, Saudi Arabia’s Oil Minister Khalid Al-Falih said on Wednesday.

In Asia, Opec’s biggest customer region, oil importers made clear they would not be happy with an artificial supply cut that hikes prices, and that in case of a cut they would seek more supplies from outside Opec.

Crude oil price fell significantly, recording a decline of 3.96% to 46.46 United States dollars per barrel.

Others believed even if OPEC were to reach a deal on Wednesday, ensuring compliance from every member to reduce output could be an issue.

Clashes between Saudi Arabia and Iran have dominated many previous OPEC meetings.

“The Algerian government has proposed a 1.1 million barrel per day cut in OPEC’s total output”, Energy Minister Noureddine Boutarfa said after meeting with his Iranian counterpart in Tehran.

“There were clear signs that the oil producing countries were willing to negotiate something, even if it was just a small cut”.

Previously in September, OPEC reached an agreement that it would trim production to between 32.5 million and 33 million barrels per day.

“They assured the market back in September that members of OPEC had an “understanding to agree” at this meeting, and the lack of a deal would suggest that the cartel remains as ineffective as they have been for the last 2 years”.