Venezuela and Algeria Define Strategy for Oil Prices

“Higher oil prices means non-OPEC producers will be more encouraged to drill for more oil, which will increase global supply and prices will be depressed again”, said Gao Jian, an energy analyst at SCI International.

Brent futures gained 22 cents, or 0.45 percent, to settle at $49.12 a barrel, its highest close since the end of October, while US crude lost 21 cents, or 0.44 percent, to finish at $48.03.

Saudi Arabia’s push for OPEC’s first oil production cut in eight years comes as its finances fall into disarray.

But it remains to be agreed what size cuts, if any, each of OPEC’s members will make, particularly Iraq and Iran, the cartel’s next-biggest producers after Riyadh.

Al-Falih’s comments came two days after Saudi Arabia pulled out of a meeting with non-members including Russian Federation, arguing that OPEC needs to sort out its internal divisions before engaging with other producers.

“The latest headlines suggest that while there is a broad agreement on the rationale for a cut, political considerations and country level quota negotiations are so far preventing a deal from being reached”, the bank said.

Oil prices fell around 2 percent on Tuesday on signs leading oil exporters were struggling to agree a deal to cut production to reduce global oversupply.

“Before we meet with non-OPEC and ask them to participate in any action, we have to have an‎ agreement that is credible with clear numbers and a system that the market believes”.

US government debt prices were higher on Monday as investors assessed the possibility of OPEC agreeing to a production cut this week. Pessimism about prospects for an agreement sent oil prices lower on Friday.

Details of the deal and on how to distribute the cuts have been left for the formal meeting in Vienna.

Saudi Arabia’s Energy Minister Khalid al-Falih said on Sunday the oil market will rebalance itself in 2017 even if producers don’t cut.

Iran has refused to cut production until it regains its pre-sanctions levels of output – although OPEC members agreed it could be exempted from any deal – along with Libya and Nigeria.

Monday’s talks will be converted into another OPEC-only meeting, OPEC sources said, to try to resolve the group’s internal differences before the ministerial gathering on Wednesday.

Commerzbank said OPEC is now producing roughly 700,000 barrels per day more than is needed.

In a 10-hour meeting, Iran said it might be ready to freeze production at about 200,000 barrels a day above its current output of around 3.975 million bpd, Bloomberg said.