Saudi Arabia Faces Cuts Dilemma Ahead of OPEC Meeting

And that is where the devil lies.

After a 10-hour meeting on Monday, Iraq and Iran continued to express objections, according to an Opec delegate who asked not to be named due to the sensitivity of the negotiations. In January, they fell below $30 a barrel for the first time in over a decade before rising to levels now that are still less than half of their mid-2014 peak.

Perhaps more importantly, it is far too low for the government finances of Opec countries.

With the drop on the day, the ten-year yield gave back some ground after ending last Friday’s trading at its highest closing level in over a year. The U.S. Bureau of Economic Analysis finds GDP grew at an annual rate of 3.2 percent in the third quarter, compared with a 1.4 percent increase in the second quarter.

India’s provisional oil import bill for 2015-2016 was Rs. 4,18,931 crore ($64.4 billion) for importing 202.5 milliom metric tonnes (mmt) of crude, down from Rs. 6,87,416 crore ($112.74 billion) paid to import 189.43 mmt.

Wide price swings are expected at least through midweek, when OPEC talks in Vienna conclude.

“Iran and Iraq are refusing to cut.simply reaching the high end of the Algiers range will require greater cuts from other members, namely Saudi Arabia, which may be hard politically”, analysts at Morgan Stanley said in a report, noting the bank was still biased towards OPEC reaching a deal.

A meeting scheduled for Monday between OPEC and non-OPEC producers was called off after Saudi Arabia declined to attend, while concerns over the feasibility of a deal pushed the crude oil volatility index close to a nine-month high. Both nations have resisted cutting their own production, but need an OPEC deal to increase prices. Iran says we have had sanctions for more than a decade.

However, some analysts said that oil price boost could be possible for a short-term only. And it has taken time for the decline in the U.S. to come though. We now can produce that, we want to produce it.

“It could still imply an OPEC production level considerably in excess of 33 million bpd, depending on developments in Libya and Nigeria and the speed and rigor of compliance”.

Oil ministers from OPEC members Algeria and Venezuela traveled to Moscow on Tuesday to try to persuade non-OPEC Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year.

But reports suggest it is proving hard.

Saud Arabia is questioning an informal agreement made in September to trim production.

Since it reentered the worldwide markets, Iran has argued it wants to raise production to regain market share lost under Western sanctions, when its political arch-rival Saudi Arabia increased output. And at least one important member appears to be listening.

The oil market “is treading into some unsafe waters” by ignoring the strength of the dollar and high inventories, said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis.

To solve the problem of oversupply and to prop up prices, the organization also needs support from non-OPEC producers.