Oil futures retreated by almost 3% on Tuesday after Saudi Arabia and Iran downplayed expectations to freeze or cut production at this week’s informal meeting in Algiers, according to Bloomberg MarketWatch.
On the New York Mercantile Exchange, November West Texas Intermediate crude fell by $1.26, or 2.7%, to settle at $44.67 a barrel, following a gain of 3.3% on Monday.
On London’s ICE Futures Exchange, November Brent crude, the global benchmark, fell $1.38, or 2.9%, to end trading at $45.97 a barrel.
Iranian officials vowed to pump output higher upon their arrival in Algeria for a three-day forum on Monday, undercutting expectations the country would agree to an output pact.
Saudi Arabia Energy Minister Khalid al-Falih reiterated Iran’s comments, stressing the meeting’s purpose as “consultative” only. OPEC sources said the differences between Saudi Arabia and Iran remain too wide, according to Reuters.
Analysts say the longstanding political rivalry between Saudi Arabia and Iran remains a core hindrance to any potential deal at Algeria.
“There is really no hope of any agreement when Iran and Saudi Arabia don’t agree,” said Alan Oster, chief economist at National Australia Bank.
Saudi Arabia has stated it would support a production freeze, only if all players are committed to the plan and if Iran caps its future production at its current daily output of 3.6 million barrels, according to sources familiar with the cartel.
“Freezing output at current levels would do little to balance the market given that the majority of OPEC members are producing at or around their peak capacity,” said BMI Research, in a note.
Meanwhile, October natural gas ended nearly flat at $2.996 per million British thermal units on the New York Mercantile Exchange.