Oil prices drop ahead of OPEC meeting

The price of benchmark crude oil has fallen almost 4% as traders question whether OPEC can agree on a deal to limit production.

In September the oil exporting cartel members voted for the first production cut in eight years.

Details of the agreement are due to be finalised at a formal OPEC meeting in Vienna on Wednesday.

But key OPEC members appear to disagree over the plan and some analysts believe the meeting may not produce a deal.

Indonesian Energy Minister Ignasius Jonan said he was not sure OPEC would manage to forge an agreement: “I don’t know. Let’s see. The feeling today is mixed.”

Brent crude oil was down $1.76 per barrel at $46.48, and US crude was down $1.80 at $45.28.

Analysts at Barclays said: “Volatility is set to be high in the oil market in the days ahead.”

Blocked
In-depth negotiations will be needed on Wednesday to cement a deal, Goldman Sachs analysts said.

“The latest headlines suggest that while there is a broad agreement on the rationale for a cut, political considerations and country level quota negotiations are so far preventing a deal from being reached,” Goldman Sachs said.

In September Opec pledged to limit production by about 700,000 barrels a day, although Iran was being allowed to increase production.

Disagreements between Iran and its regional rival, Saudi Arabia, had blocked earlier attempts to reach a deal.

Many of OPEC’s smaller members wanted limits after oil prices fell from $110 a barrel over the past two years after oversupply and slowing demand.

BBC