Iran said it won’t cut oil production, raising doubts over whether OPEC will reach a global output-limiting deal on Wednesday. The country will leave the output steady, Oil Minister Bijan Namdar Zanganeh said in the Austrian capital when asked whether Iran would cut output. Analysts anticipated Iran and Iraq would participate in the production cut deal.
Global crude benchmark Brent for January deliveries declined 3.75 percent to $46.43 a barrel by 11:13 a.m. While U.S. West Texas Intermediate fell 3.8 percent to $45.27 a barrel.
Officials from the Organization of Petroleum Exporting Countries will meet in Vienna on Wednesday to discuss details of the output limited agreement. In September, OPEC agreed to cut output by about 1.2 million barrels a day from the level in October.
"We now see a very low chance for an OPEC cut," said Bjarne Schieldrop, chief commodities analyst at Nordic bank SEB. Analysts are not optimistic on tomorrow’s meeting as Iran, OPEC’s third-largest oil producer, are resisting pressure from Saudi Arabia to cut output. Analysts said if OPEC fails to reach an agreement, oil price will fall in the short term
"If no deal is reached, our expectation of rising (crude) inventories through 1H 2017 would warrant prices averaging $45 per barrel through next summer," Goldman said, noting a move to below $40 per barrel would be difficult to sustain.