Last OPEC Push for Oil Deal Shifts Focus on Iran, Russia

OPEC’s final push to implement the Algiers supply accord and boost oil prices shifted focus to Iran and non-members such as Russia as Iraq appeared to reverse its opposition to output cuts.

With less than a week until the crucial Vienna ministerial meeting, the refusal of just one major producer to participate could scuttle the whole deal, Bloomberg reported.

Even if Iraq, second only to Saudi Arabia in the Organization of Petroleum Exporting Countries, is on board, other issues remain. Iran, the group’s third-largest producer, is insisting it should be allowed to keep increasing output to pre-sanctions levels of about 4 million barrels a day.  Russia’s offer to freeze production at record levels—if OPEC does a deal—is not good enough for some members who are asking for a cut.

“The change of direction in the positioning of Iraq increases the likelihood of an OPEC agreement,” said Olivier Jakob, managing director of Zug, Switzerland-based consultant Petromatrix GmbH. “The sound bites of different oil ministers have not been enough to build confidence in OPEC and the market has turned into full wait-and-see mode.”

Algeria’s Energy Minister Noureddine Boutarfa is planned to travel to Tehran on Saturday to meet Oil Minister Bijan Namdar Zanganeh in an effort to bring a deal closer. On Monday, he will meet with Iraq’s Oil Minister Jabbar Al-Luaibi in Vienna.

Iraq is now less of a problem after positive statements from Baghdad and Iran is now the focus of diplomatic efforts, said a person familiar with the matter.

Iraq has been disputing the OPEC supply estimates that would form the basis of cuts, saying they underestimate its production. OPEC has asked non-members to cut production by 500,000 barrels a day, Russian Energy Minister Alexander Novak told reporters in Moscow Thursday.

The role of Russia is going be critical in shaping a deal, said Emmanuel Kachikwu, Nigeria’s minister of state for petroleum, but Novak still insists the nation is only willing to freeze at current record levels.