The prices for Brent crude oil rose by 8.26 percent Nov.30 after the positive remarks made by OPEC members regarding the possible results of Vienna meeting.
By Monday, OPEC was scrambling to rescue the deal, with analysts warning of a sharp price correction if they fail, and prices spiked as Iraq's oil minister said the country would cooperate with the group to reach an agreement "acceptable to all".
It's worth noting that U.S. shale oil will still be the marginal source of crude over the next several years, and breakevens there could-if anything-be influenced lower by lighter regulatory constraints under the Trump administration. On Monday they were little changed. "We don't have a single path which is to cut production at the OPEC meeting, we can also depend on recovery in consumption, especially from the U.S". "I am not concerned about a no-agreement scenario", he said.
In September the oil exporting cartel members voted for the first production cut in eight years.
Many of Opec's smaller members wanted limits after oil prices fell from $110 a barrel over the past two years after oversupply and slowing demand. OPEC has kept up production to pressure high-cost rivals, such as the developing USA shale oil producers.
Iraq has argued it should be exempted from cuts as it's fighting Islamic State militants. It also disputes with OPEC the level of its current output.
Disagreements between Iran and its regional rival, Saudi Arabia, had blocked earlier attempts to reach a deal.
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With the cut, OPEC's production will drop to 32.5 million barrels a day, effective on January 1, 2017.
Adding to the difficulties is the fierce rivalry between Shia Iran and Sunni Saudi Arabia, engaged in a proxy war in Yemen and backing different sides in Syria.
On Tuesday, Iran wrote to OPEC saying it wanted Saudi Arabia to cut production by as much as 1 million bpd, more than Riyadh was willing to offer, OPEC sources who saw the letter told Reuters.
Before the meeting, Saudi Energy Minister Khalid al-Falih said Opec was indeed focusing on significant cuts and hoped Russian Federation and other non-Opec producers would contribute a reduction of another 0.6 million bpd. Iran's letter to OPEC suggested Saudi Arabia should cut output to 9.5 million bpd. He assigns that outcome a 25 percent probability, while seeing a 15 percent chance of there being no deal at all, a scenario that would trigger a crash in prices to below $40.
Crude oil remained depressed in recent sessions on skepticism over OPEC's commitment to freeze production as the energy market suffers from a global supply glut. Production in Libya and Nigeria is extremely volatile due to internal strife, and Iraq also has shown pronounced swings in production, so 2.65% is really comprehended by normal volatility in the oil market. "Any increase in oil prices would reduce that financial pressure".
OPEC has agreed to cut its oil production for the first time in eight years, ending a strategy of high supply that had aimed to cripple the US energy industry but also led to decade-low prices and drained the budgets of crude-producing nations.
The US industry could also be given a helping hand by president-elect Donald Trump.