“The OPEC consultation in Vienna last weekend was only a technical meeting, but the lack of progress on implementing production quotas and the growing discord between OPEC producers suggests a declining probability of reaching a deal on Nov. 30,” Goldman Sachs analysts including Damien Courvalin and Jeffrey Currie said on Tuesday.
Oil prices had risen, with benchmark US futures reaching above $50 a barrel after OPEC members pledged in September to make supply cuts. Since then, speculation about whether a deal will succeed has tempered crude prices.
While OPEC Secretary-General Mohammed Barkindo told Bloomberg Television on Monday all of the group’s members as well as Russia are committed to finalizing the agreement, the weekend’s technical forum might indicate otherwise after Bloomberg cited delegates as saying they struggled to reach agreement on how the cuts should be allocated.
“Recent comments from Russia, Brazil, Kazakhstan suggest these countries are not yet willing to freeze output at current production levels,” Goldman Sachs analysts said. And “Iraq and Iran remain committed on being exempt from a production quota.
Oil prices could go in the low $40 a barrel area “if OPEC is unable to deliver a convincing agreement,” according to the analysts.
“Even if the fear of such low prices leads OPEC to deliver an agreement on Nov. 30, we reiterate our view that the odds of it succeeding are low,” the analysts added.