Oil prices edge up ahead of Opec meeting

Rebecca Smith
A new dawn for Opec? Its highly anticipated meeting is today
A new dawn for Opec? Its highly anticipated meeting is today (Source: Getty)

It's all getting very nervy ahead of a meeting of the Organisation of the Petroleum Exporting Countries' (Opec) later today.

Members of the producer cartel will try to seal a deal on an output cut to clamp down on oversupply after oil prices have more than halved since 2014.

And oil markets reflected the edginess - they inched up in trading ahead of the meeting, after dropping four per cent yesterday over concerns Iran and Iraq will hold out against conditions sought by Saudi Arabia's representatives, according to Reuters.

Read more: Oil prices fall as Opec production cut possibility slips away

Today the perspective was a bit brighter - despite the much-discussed disagreements, analysts are anticipating some sort of agreement being reached.

International Brent crude was up 0.6 per cent at $42.52 a barrel, though the markets are expected to veer either way, depending on how events pan out at the meeting in Vienna today.

Analysts at Goldman Sachs, ANZ and Barclays said oil prices will quickly rise above $50 per barrel if an agreement is reached. Should things go the other way, we could be braced for a fall to the low $40s.

Read more: Banks and oil stocks drag down FTSE in morning trading

Opec made an initial agreement in September to cap output around 32.5-33m barrels per day (bpd) versus the current 33.64m bpd to prop up prices, with exemptions for Iran, Libya and Nigeria as their output had been affected by sanctions.

But according to the International Energy Agency, the group produced more than that for October; a total of 33.83m bpd. So more cuts are needed if an agreement is to be implemented.

Opec's 14 members account for a third of global oil production. Its biggest player is Saudi Arabia. And it's taken them a long time to get to this point of agreeing some kind of restraint on production.

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