Iran a key sticking point as world’s big oil producers meet in attempt to stabilise prices after months of uncertainty.
The world’s biggest oil producers are meeting to hammer out a possible agreement to freeze output and reassure markets that a recent recovery in prices can be sustained.
Sunday’s talks in Qatar will see the Organisation of the Petroleum Exporting Countries (OPEC) – and other major producers – try to agree that average daily crude oil production in the coming months will not exceed levels recorded in January.
According to a draft copy of the agreement, seen by the Reuters news agency, the cap would last until October 1 this year, and producers would then meet again in Russia to review their progress in engineering what the document called “a progressive recovery of the oil market”.
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Final agreement has not been reached on the draft but, speaking to reporters at the meeting on Sunday, Anas Khalid al-Saleh, Kuwait’s acting oil minister, said he was confident a cap would be agreed.
There have, however, been conflicting statements in the run-up to the summit after months of disagreements about the impact any freeze would have on individual OPEC members.
The position of Iran, now ramping up production after Western sanctions were lifted as part of the nuclear deal between it and world powers, has proven a sticking point.
Countries such as Ecuador and Venezuela have been hardest hit by plummeting prices. Venezuela has seen its worst recession since the 1940s, and its economy is expected to shrink by 10 percent this year.
Larger OPEC producers, though, have insisted on keeping production levels high, because they do not want to lose customers to non-OPEC producers like the United States.
Iran said there was no point in it sending a full delegation as it would not accept proposals to cap its production until it recovered a similar market share to that which it held before the sanctions were imposed.
It would instead send Hossein Kazempour Ardebilli, an OPEC governor, according to a report by the oil ministry news agency, Shana.
“It is impossible for the meeting to fail,” Kamel al-Harami, a Kuwaiti oil analyst, told Al Jazeera on the sidelines of the summit, adding though that were differences of opinion, particularly between Saudi Arabia and Iran.
Tehran, however, did not yet have the power to cause significant fluctuations in prices, he said.
Ministers were tight-lipped after preliminary talks in the morning, refusing to talk to reporters as they headed to a meeting with the Emir of Qatar, Sheikh Tamim bin Hamad al-Thani, whose government currently holds the OPEC presidency.
Uncertainty over the outcome of the summit has already added to market volatility, with some analysts questioning whether a cap would have much impact on prices in the short-term.
“A decision to freeze production may not trigger an immediate upsurge in oil prices, [but] risks are on the upside as overcapacity would gradually start to normalise over the coming months,” Apostolos Bantis, a credit analyst at Commerzbank, told Al Jazeera.
Producers would continue to develop the process of consultation on the best ways to bolster the market and the deal would be open for other states to join, the draft document said.
Despite tanking prices and a glut in global supplies, OPEC members had previously increased production levels as disagreement grew about which strategy to take.
The cartel is made up of Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.
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