OPEC and non-OPEC oil producers plan an informal meeting in Istanbul Oct. 8-13 to discuss how to implement a production deal OPEC members reached in Algiers last month, Algerian Energy Minister Nouredine Bouterfa has told local Ennahar TV.
Bouterfa said the Algiers deal to cut output would be in force for up to a year.
Oil prices rose about 7 percent in September, ending up a second straight month, after OPEC unveiled plans in Algiers to reduce output to between 32.5 million and 33.0 million barrels per day. Details are still being worked out among producers.
OPEC’s deal foresees the cartel cutting its collective output to between 32.5 million barrels and 33 million barrels a day, down from August levels of 33.2 million barrels a day. But determining how much countries will cut is a politically fraught negotiation that has undone previous efforts to curb output and boost prices, most recently in Doha, Qatar, in April.
One of the main stumbling blocks to an agreement in the past has been Iran, which wants to boost its output after years of international sanctions ended earlier this year. Libya and Nigeria have also had lower output in recent months given ongoing conflicts in both countries.
The return of barrels from those countries means bigger cuts will be needed from other OPEC producers, including from the biggest one, Saudi Arabia. That would require a move from Riyadh’s two year policy of defending its market share by pumping at full tilt.
U.S. shale oil drillers are another factor that could upend OPEC’s desire to follow through on their agreement. Drilling has been rising since the beginning of the summer. Many oil producers believe drilling in some U.S. regions can be profitable even with oil prices in their current range of $40 to $50 a barrel. This could mean U.S. production, which is down from last year’s highs, could rise again analysts say.
Global oil demand, meanwhile, has softened in key regions, including in India and China, the world’s second biggest consumer.