Energy ministers are gathering in the Austrian capital this week to determine the future of OPEC's 18-month-old agreement with Russia and other producers to limit oil output. The strategy has shrunk a global crude glut, but with oil prices recently hitting 3½-year highs, the producers are trying to reach consensus on easing the output caps to prevent the market from overheating.
Saudi Arabia and Russia, both of which have the ability to increase production, are pushing for a substantial output hike. Meanwhile, countries without spare capacity — including Iraq, Iran and Venezuela — began the week lobbying to keep the supply limits in place.
The rift has stoked speculation that this year could see a repeat of OPEC's disastrous June 2011 gathering, which ended without an agreement. But after a day of comments from oil ministers, analysts said there was more optimism that the cartel would reach a deal before it meets officially on Friday.
Daniel Yergin, vice chairman of IHS Markit and a closely followed OPEC watcher, said he believes the prospects of reaching an agreement had improved since Tuesday.
"They appear to be on their way to a new deal that's going to put more oil on the market," he told CNBC.
On Tuesday, Iranian Oil Minister Bijan Zanganeh said he doubted OPEC could reach a deal this week. He also railed against Saudi ally President Donald Trump, saying American sanctions on OPEC members Iran and Venezuela had sent oil prices higher.
But on Wednesday evening, Zanganeh told CNBC that he was feeling "very good" about OPEC's production levels.
J.P. Morgan analyst Christyan Malek expects OPEC to strike a deal that will satisfy Iran and put the cartel on track for an agreement with Russia and other producers, who are scheduled to meet on Saturday. While the group might eventually raise output by 1 million bpd, he anticipates a 500,000 bpd increase to start.
Reference: CNBC
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