Saudia Arabia has told the Organisation of Petroleum Exporting Countries (Opec) that it won't attend talks with non-Opec producers due to be held next week.
Opec is scheduled to discuss supply rates with producers that aren't a part of the cartel on Monday, with Opec oil ministers meeting on Wednesday to hammer out a final deal.
However, Saudia Arabia told Opec today that it will not attend Monday's talks, Reuters reported.
Brent crude oil is down 1.39 per cent this afternoon, at $48.32, with US benchmarket West Texas Intermediate down 1.31 per cent at $47.33. While prices are down today, they have enjoyed a strong week on hopes that Opec will reach agreement on a production cap next Wednesday at its meeting in Vienna.
Russia, which is not an Opec member, has previously stated that there is a good chance that producers will reach a consensus on an output limit.
Oil analyst Malcolm Graham-Wood said today that a 4.5 per cent cut is "still on the cards", but added: "Whilst an agreement maybe announced it may not be deliverable. It’s an important one to get right, keep the price up through 2017 and a number of rewards will be bestowed upon the faithful, the impact of the trillion dollar capex cuts and of course the possibility of a successful Aramco float."
Cutting production levels would help bring prices up further, by reducing the amount of oil pouring into an already over-supplied market.
Opec provisionally agreed to freeze production at a September meeting in Algeria, but it has yet to be finalised.