Questions linger over Opec Algiers deal: Update

Opec members concluded their third high-level technical meeting in Vienna today, still struggling to finalise details of a deal to present to the ministerial meeting later this week.

After a nearly 11-hour meeting, departing delegates said there was agreement on a deal to curb oil production which will be presented to ministers in a 30 November meeting.

Opec's preliminary proposal, agreed to in Algiers at end-September, was to limit the group's output to 32.5mn–33mn b/d. The latest proposal now targets the lower end of the range, an Opec delegate said. Opec crude production was 33.64mn b/d in October, according to secondary sources, up from 33.41mn b/d in September.

But some comments tonight left room for doubt that all parties are fully on board.

UAE Opec governor Ahmed Mohamed Alkaabi said as he left the meeting that the committee has "finalised a mandate" to implement a production target for six months. But Alkaabi added that "some concerns" remain when asked if Iraq and Iran were also on board, without giving further details.

Iran has steadfastly maintained its stance that it will not cut or freeze its output until it first raises its production to at least 4mn b/d — the level it says it produced before sanctions on the purchase of its crude were implemented in early-2012.

Underlining the Iranian position, oil minister Bijan Namdar Zanganeh said today that he felt those countries that "raised their production significantly" in the last two years should "bear a greater share of the burden of the cuts" required as part of the Algiers deal.

"Now that we want to manage the market, it is natural that those countries … accept their responsibility," Zanganeh said.

Iran is still looking to be exempt from the cuts, an Opec delegate said following the meeting's conclusion, confirming that individual country production limits had not yet been finalised.

Iran reported to Opec that its October crude production rose to 3.92mn b/d, up from 3.71mn b/d in September.

Iraq has been unwilling to accept the use of secondary source figures, which it has said underestimate its output. It put its production at 4.776mn b/d in October, against 4.561mn b/d by secondary sources. And while Iraq has been signaling greater willingness to cooperate on cuts in the past few days, it is unclear at what level they are willing to join a cut.

Despite "some remaining concerns," delegates largely described the meeting as successful.

"Today was a good day," Kuwait national representative Mohammed al-Shatti told Argus upon departure. "At least people are happy. Everyone is in a positive mood."

He reiterated the deal to curb output would be for six months but declined to comment on the amount of any cut. The duration of the output target had already been agreed upon in last week's technical meetings.

The third high-level technical committee meeting replaced a scheduled meeting between Opec and some non-Opec countries, which was shelved until Opec members can agree on terms of a potential output cut amongst themselves.

Opec delegates said the high-level technical committee will not be meeting again before the 30 November ministerial meeting, although "there are likely to be many bilateral meetings".