Chances of oil output freeze deal is negligible

The informal OPEC meeting is expected in late September in Algeria. It is expected that the talks on oil production freeze will be held between OPEC and non-OPEC countries.

The meeting will be held at the fringe of the International Energy Forum in Algiers from 26-28 September. The forum will bring together ministers, CEOs, international organizations like OPEC and the IEA, experts from 73 countries.

JP Morgan analysts believe that any agreement would require the participation of Iran and Russia, as well as GCC members.

"However, the prospects for a deal appear to have receded in recent days as comments by Russia’s government (including the Energy Minister and President) that it would not support a deal, have subsequently been changed to indicate that a deal would need a carve out exemption for Iran,” analysts said in the weekly Oil Market report, obtained by Trend.

JP Morgan analysts see such a concession being included in a deal as unlikely to be agreed to by other key exporters, notably Saudi Arabia.

While the rationale for a producer deal is still enticing, analysts expect that any agreement would need to involve all OPEC producers, with the exception Libya and Nigeria, both of whom are well below nameplate capacity due to a variety of domestic security issues.

"While most producers can justify (at least to themselves) some exemption or exception for why they should not be bound by any agreement to limit output, we think only Libya and Nigeria can realistically be excluded,” analysts said.