Crude oil prices fell in early Asia trade on Wednesday, as optimism that major producers would agree to a production freeze agreement ebbed after Iran signalled it has little interest in such a deal.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in September CLU6, -0.99% traded at $46.24 a barrel, down $0.34, or 0.7% in the Globex electronic session. October Brent crude LCOV6, -1.10% on London’s ICE Futures exchange fell $0.47, or 1%, to $48.76 a barrel.
Oil prices rose to a fresh one-month high overnight after news that Russia planned to meet the Organization of the Petroleum Exporting Countries in October, buoyed hopes of a collective cap on output.
A weaker dollar DXY, 0.25% also gave oil prices a lift.
However, indications from Iran that it may not participate in the OPEC talks next month stirred speculation that the meeting in Algeria would yield no concrete action to stabilise the oil market.
On Tuesday, an Iranian press official said the country likely wouldn’t be pumping at the pre-sanction level — between 4 million and 4.2 million barrels a day — by the time the talks takes place from September 26 to 28.
Moreover, she pointed out that Iran had never set a time frame on when it plans to reach that level and had not made up its mind about attending the meeting.
Iran’s apparent reservation prompted other OPEC members to be more apprehensive with some saying there would be no pact without Iran’s pledge–a longstanding condition set by Saudi Arabia and its Arab neighbors.
“Iran has to be there or there will be no freeze,” one OPEC delegate in the region said.
Some market observers said Iran may not be alone in opposing a freeze.
Countries such as Libya and Nigeria, whose crude production and exports were stunted by internal strife and militant attacks in the past few months, could also either ask for a special postponement or the right to freeze their output at the level of their maximum production potentials, said a Geneva-based oil trader.
Source: Market Watch