Today, oil prices lost again by over 3 % due to a major setback in the OPEC deal. Some OPEC member countries had struggled to reach a consensus over how much production they should cut. There were long talks about the cut in production, but no positive result emerged as the major member countries failed to reach a deal. The cut in production is aimed at boosting the price of the commodity which has been hit by a supply glut over a couple of months.
Why the deal has failed
The deal met its major setback simply because two of the major producers of the commodity are refusing to cut production. According to sources, both Iran and Iraq are not interested in cutting the price. This is despite Saudi Arabia’s decision to cut production in a bid to push the price of the commodity further up.
But, this is not shocking. Prior to the meeting, Iraq had expressly indicated that it was not interested in cutting production. Iran had made similar indications weeks before the meeting which is scheduled to be held in Austria tomorrow. Saudi Arabia is perhaps the only major oil producer to have agreed to cut production.
New oil dealers likely to emerge in the near future
In an event that the deal is sealed, chances of new oil dealers emerging are very high. The US is perhaps one of the leading homes of upcoming oil dealers that are likely to put pressure on the oil prices. Therefore, experts believe that the rally in the prices of oil is likely to be short lived. It may sublime once the numbers of players on the market increase as they are likely to restore the initial supply glut which characterised the market for over 2 years.