Leading oil producers to discuss supply deal in bid to revive prices
Major oil producers are set to gather in Algiers this week, raising hopes of a potential supply deal that could support floundering crude prices.
The three-day International Energy Forum will bring together key m embers of the Organisation of the Petroleum Exporting Countries (Opec) including Saudi Arabia, and major non-Opec crude producers like Russia.
Experts have speculated that the cartel's members could agree to freeze or cut production levels in order to cap supply and ultimately boost oil prices, which have dropped dramatically over the past two years.
The price of global benchmark Brent crude has plunged 60%, falling from its June 2014 peak of 114 US dollars per barrel to around 46 US dollars per barrel.
"It's well known Opec members are facing huge revenue shortfalls and they need to agree a co-ordinated cut in production. We expect the oil prices to recover if such an outcome is agreed by all the members," Mihir Kapadia, Sun Global Investments CEO, said.
However, experts are pessimistic that Opec will finally strike a deal.
"Given that Opec has failed to agree much of anything in the last 12 months, it seems unlikely that it will start now, though it could kick the oil barrel towards the November meeting," Michael Hewson, chief market analyst at CMC Markets UK, said.
Opec currently consists of 14 member states, including Saudi Arabia, Iran, Iraq, Qatar, Venezuela, and the United Arab Emirates.
Oil prices fell on Friday following a report that Saudi Arabia had offered to cut its output on the condition that Iran freezes production levels, but did not expect a supply decision to be made in Algiers.
Saudi Arabia has been seen as a major roadblock towards a supply deal, with analysts speculating that the country is trying to squeeze out new producers in a bid to maintain market share.
"Considering Saudi Arabia's production levels continue to rise to record levels since the beginning of the year, we believe that the possibility of such an agreement is low," Mr Kapadia explained.
The 15th annual International Energy Forum runs from Monday, September 26 to Wednesday, September 28.