Oil prices plummeted on Tuesday, as news broke that Iran and Iraq have become increasingly resistant to any output cut that could be agreed at the OPEC meeting tomorrow.
Efforts to secure an output cut have been frustrated by tensions between Iran, Iraq and Saudi Arabia, Bloomberg reported on Tuesday, despite an all-day meeting taking place on Monday.
Iran have been reluctant to be party to the output cuts, arguing that they need to up production to make up for the time lost whilst their oil was subject to Western sanctions. During that time Iran’s rival Saudi Arabia significantly increased their output, although they have since offered to reduce their output by 0.5 million barrels per day.
The current output cap under discussion would take Iran’s production down to under 4 million barrels per day, but Tehran are still aiming to produce 4.2 mpd.
Iraq have also been resistant to join an output cap, arguing that it needs more money to fight internal divisions in the country created by the Islamic State.
OPEC, which accounts for a third of global oil production, agreed to bring production down to between 32.5-33.0 million barrels per day in September as part of an attempt to counteract falling oil prices. For months the oil market has suffered from oversupply and a lack of demand, halving the price of oil since mid-2014.
Indonesian Energy Minister Ignasius Jonan told reporters that he was not sure OPEC would clinch a deal to limit oil output when it met:
“I don’t know. Let’s see. The feeling today is mixed,” he told reporters when asked about the prospects of a deal.
Non-OPEC producer Russia declined to attend November’s meeting, again reiterating that a meeting with OPEC may be possible sometime in the future.
WTI Crude is currently down 3.76 percent at $45.31 per barrel, with Brent Crude down 3.75 percent at $46.43 per barrel.