Saudi Arabia’s energy minister said on Wednesday that an “optimistic” sentiment prevailed at an OPEC meeting meant to agree the cartel’s first oil output cut in eight years. “We don’t know (if a deal will be reached),” Khaled al-Falih told reporters in Vienna as the talks started. “We will find out during the meeting. I think the sentiment generally is optimistic and positive.”
Iran’s Oil Minister Bijan Namdar Zanganeh said that there was a “framework” for agreement that still needed to be finalised.
The hoped-for cut by the 14-member Organization of Petroleum Exporting Countries is aimed at easing a global supply glut and therefore boosting the market price of oil.
Oil prices rose around five per cent today as the meeting began, continuing their recent run of volatility. In recent days market expectations for an accord have been generally pessimistic.
Iraq and in particular Iran, OPEC’s next biggest producers after Saudi Arabia, are seen as being uneasy about agreeing to reduce production.
“We have communicated repeatedly over the last few months that any production constraint agreement has to be distributed in a equitable way, in a fair way, in a transparent way and has to be manageable and has to be a mechanism to monitor it. And it has to involve OPEC and non OPEC,” Falih said.
He again indicated that Saudi Arabia could also live without a deal, saying that he expected prices to stabilise in 2017 in any case.
“If there is no agreement, I think the market will recover slowly but certainly so I’m not concerned about the no agreement scenario,” he told a scrum of reporters at OPEC headquarters.
“I’ve said it repeatedly that the fundamentals are moving in the right direction. We’ve seen in the last few months a counter cyclical decline in US inventories and we believe that 2017 will see another high year of demand.”