Saudi-Iran rivalries could scuttle tentative OPEC deal

“We have not achieved an agreement within OPEC”, a Gulf source familiar with Saudi oil thinking said on Friday.

At its Wednesday meeting in Vienna, the cartel is expected to cut production to between 32.5 million and 33 million barrels per day, according to a September OPEC press release.

However, that is not preventing some oil market observers from speculating that OPEC will be able to reach an accord to pare production, potentially boosting prices along the way.

Saudi Arabia’s energy minister Khalid al-Falih said on Sunday that Saudi representatives would not attend the talks originally scheduled for Monday because no agreement within OPEC had been reached so far. Saudi Arabia’s focus on taking back market share from the United States shale industry and the return of Iran and Iraq to the market after long absences have ensured that. Libya too insists that its economy is too fragile to take any cuts.

Iran, free to export oil since last year’s nuclear deal, won’t cut production until it has reached pre-sanctions levels. Iran has sought special treatment since it is newly free of worldwide sanctions, while Iraq has contested OPEC’s production estimates that would form the basis for the accord.

OPEC members are holding bilateral meetings as they try to reach an agreement at a general meeting on Wednesday.

The Organization of the Petroleum Exporting Countries is attempting to get its 14 member states, along with non-OPEC member Russian Federation, to implement coordinated production cuts aimed at reducing a global supply glut that has seen oil prices halve in two years.

On Friday, OPEC canceled an experts meeting with non-OPEC producers scheduled for November 28 after Saudi Arabia said the organization needed to sort out its differences first. “Any increase in oil prices would reduce that financial pressure”.

Stratas’ forecast aligned with the direction of the actual price movements, and in fact, the price of crude oil moved more positively than forecast until the end of the week.

OPEC aims to remove a supply glut and prop up oil prices, which at below $48 a barrel are less than half their level of mid-2014.

Saudi Arabia, once seen as fabulously wealthy, is projecting a budget deficit of $87 billion in 2016. It has slashed spending and salaries and owes private firms billions of dollars. This report was also connected with the notice that the prices of crude oil then may get fall to $35 per barrel. Although recent statements from the OPEC and non-OPEC countries suggest that there is a broad agreement on the rationale for a cut, quota negotiations are very stressful.