The OPEC rumor mill is in hyperdrive with today's Reuters report citing sources that say Iran is "sending positive signals" on a production freeze. Like a marionette, the market follows.
Iran may actually attend this informal OPEC meeting but only because it will be held on the sidelines of the International Energy Forum (IEF) and attended by potential customers for its crude.
But this freeze sequel ends the same as last April's attempt - no agreement & no freeze.
This is just public relations so Iran doesn't look like the bad guy after the Saudis made comments earlier this month about cooperating with other OPEC members "if necessary."
In our view it is still too soon for any change in OPEC production policy. Saudi Arabia is more nervous about oil at $50 than $40 because they know it keeps US shale alive. The Saudis only care about declining US production and need to see more of it.
Iran is just eight months into ramping up exports and regaining market share. So they simply can't agree to any limits on production now. Arguments that Iranian production is plateauing will fall on deaf ears in Tehran.
Throw in other recent news reports that Iran plotted to assassinate the Saudi ambassador to Iraq -- and we don't have the makings of a productive meeting in September.
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Editor's Note: Here's a recent interview where McMonigle explains why Saudi Arabia and Iran will once again dash OPEC oil production “freeze” discussions.