Crude oil prices, after plunging to a three-month low, snapped back on reports of a new diplomatic push by OPEC to finalize a deal to cut production. The report by Bloomberg said that Qatar, Algeria and Venezuela is leading the push to overcome the divide between Saudi Arabia, Iraq and Iran.
Oil prices eased on Tuesday on news that Iran and Libya have continued to increase production, overshadowing an OPEC agreement struck last week to freeze output levels in a bid to stem a two-year price rout.
The Saudis are making huge concessions to achieve a freeze on global oil output and the world waits for Iran’s decision. The Saudis have offered to cut their own oil production and offered to allow Iran, Libya and Nigeria to increase their oil production to “sensible” levels. While it is likely that Libya and Nigeria would agree to be allowed to increase their production to recent highs, it is unclear whether Iran will go along.
Saudi Arabia and Iran on Tuesday dashed hopes that OPEC oil producers could clinch an output-limiting deal in Algeria this week as sources said the group and non-member Russia were still trying to bridge differences between the kingdom and Tehran.
The market’s initial response to the U.S. presidential election debate overnight was a clear sigh of relief. The Mexican peso, which had hit a record low against the dollar just the day before, surged higher, as too did the Canadian dollar, Japanese yen and global stock index futures. However most of those moves have already reversed as traders were quick to take profit, knowing full well that a TV debate may not necessarily affect the outcome of the actual votes in a meaningful way, especially those of the die-hard supporters of Trump and Clinton.
Talks between Saudi Arabia and Iran had not gone well as the Iranians seemed intent on raising output to 5 million barrels a day and the Saudis wanted to have independent verification of oil output to make sure there was no cheating.
Saudi Arabia has offered to reduce oil production if rival Iran agrees to cap its own output this year, in a major compromise ahead of talks in Algeria next week, four sources familiar with the discussions told Reuters.
The price of crude oil has been caught in one of its most volatile couple of weeks in months after Oragnization of the Petroleum Exporting Countries (OPEC) and rival Russia hinted they may discuss a possible output freeze, as demand slows and a global surplus becomes more entrenched.
Iran's steep oil output growth has stalled in the past three months, new data showed, suggesting Tehran might be struggling to fulfill its plans to raise production to new highs while demanding to be excluded from any OPEC deals on supply curbs.