Oil: OPEC meeting in Algiers may prove anti-climactic - BBH

Research Team at BBH, suggests that the OPEC meeting in Algiers may prove anti-climactic as speculation of a deal had lifted oil prices, but before the weekend, it became clearer to many that there would be no deal. 

Key Quotes

“The price of oil slid 4%, the most since mid-July.  The technical condition warns of further losses in the week ahead. 

We are neither experts in the oil market nor specially trained in the nuances of Middle East affairs, but as acute students of political economy, we have consistently warned against ideas that an agreement is at hand, which have arisen on a number of occasions this year.  The bedrock of our argument is that Saudi Arabia will not yield market share to Iran.  Iran cannot agree to freeze its output until its production reaches pre-embargo levels near 4 mln barrels a day.  It has been stuck at about 3.6 mln barrels for the last few months. 

What seemed to excite many were reports that the Saudi's offered to cut output if the Iranians froze their production.  We suspect the Saudis understood that this was a non-starter, even if many market participants took the bait and drove prices nearly six percent higher in the four-day rally that ended before the weekend.  The Saudis' tactics may have been aimed at deflecting criticism of low oil prices away from it, and its near-record output (~10.6 mln bpd in August), to Iran.”