If the 14-member Organisation of the Petroleum Exporting Countries (Opec) is able to clinch a deal on output limit at its ordinary meeting in Vienna on November 30, Doha will have played a key role in setting the ground for such a pact, the first one since 2008.
After informal talks in Doha at the weekend on the sidelines of a gas forum here, major oil producers look more confident of striking a deal, which will provide some stability to the global oil market.
Reports indicate Opec is moving closer towards finalising a deal to limit crude output, with most members prepared to offer Iran significant flexibility on production volumes.
During the Doha talks, Opec member countries proposed Iran cap its oil output at 3.92mn barrels per day (bpd), a Reuters’ dispatch showed.
Analysts say Iran has been the main stumbling block for such a deal because Tehran wants exemptions as it tries to regain oil market share after the easing of Western sanctions in January. Iran has previously said it would accept a freeze at between 4mn and 4.2mn bpd.
In Doha, the Opec members looked committed to striking a deal by the month-end to rein in oversupply and buoy prices. They agreed initially in September in Algiers to cut their collective output to 32.5mn – 33mn bpd and have been trying to persuade other suppliers, notably Russia, to join the cuts.
Last month, the organisation had estimated its own output at 33.6mn bpd.
Opec’s 14 members, who supply about 40% of the world’s oil, will meet in the Austrian capital on November 30. Iraq and Iran are seeking exemptions from any cuts.
The group is working on an output deal that would last for six months or possibly a year, with a revision after the first six months, Algerian Energy Minister Noureddine Boutarfa said in Doha.
“That’s the proposition that apparently has consensus,” he noted.
The Algiers accord recognises three countries that have special cases. Any oil-supply deal would include a mechanism for Iran, whose output is recovering after the lifting of international sanctions earlier this year.
Libya and Nigeria, where production is still recovering after a spate of violence and militant attacks targeted oil infrastructure, are the two other special cases, according to Opec secretary general Mohamed Barkindo.
If Opec reaches a deal by the month-end, it may also draw support from non-Opec members including Russia, which promised to co-operate but so far has refrained from any firm commitment.
Russia has already stated it was prepared to join and cap output for six months or longer, if a deal was reached.
Oil markets were also under pressure from a strengthening dollar after comments from Federal Reserve chairwoman Janet Yellen raised expectations that the central bank will raise interest rates next month. A stronger dollar makes oil more expensive in other currencies.
But if the producer group succeeds in setting a production cap by adopting ceilings for countries, it will speed up the much needed balancing of supply and demand and shore up prices.