Takeaway: If there’s a deal: 1) Iran will freeze but say it is not freezing 2) Russia must cut bigly, not freeze.

Dispatch From Vienna (Part 3): OPEC Talking Deal But Details Will Matter  - opec prices

VIENNA NOVEMBER 30 – Hedgeye’s energy team is in Vienna, Austria at the OPEC Ministerial meeting today. The Ministers started the morning at a special pre-meeting breakfast at the Park Hyatt hotel. At about 10:30 AM Vienna time, the Ministers started a closed door general session at OPEC headquarters and are still meeting. We expect the meeting to continue until about 4:00 PM Vienna time or 10:00 AM Eastern.

the key developments today:

After a gloomy atmosphere last night, every OPEC minister except for newbie Indonesia said they were confident there “will” be a “deal.”

Oil prices are up big on the prospects for a deal but the details will be important. Remember the Algiers “deal” was really only an agreement to agree. Then there’s compliance of a deal that Saudi Arabia seems to be alone in stressing.

If a deal is achieved, Iran will freeze production but will claim it is not freezing since it is politically unacceptable for its Presidential election next year.

Finally, Russia’s alleged promise to cut production, and not simply freeze, appears to be the big game changer this morning for prospects for any deal. Even if Russia agrees to cut, there are practical and logistical hurdles that will make it difficult to carry out in the dead of winter.

In our view, Russia’s compliance will be the deal’s weakest link.

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