EMEA News
Saudi Arabia And Iran Meet Prior to Algiers as UAE Warns Against Any "Quick Solutions"
A meeting this week between delegates of Saudi Arabia and Iran, whose rivalry caused the collapse of freeze talks earlier this year, was reportedly to prepare for discussions between Organization of the Petroleum Exporting Countries (OPEC) and Russia at the Algeria freeze talks next week – but pundits think it heralds a positive outcome for the maligned talks.
Michael Lynch, president of Strategic Energy & Economic Research, told media, "We may be starting see a change of attitude in Riyadh; a positive result to the talks in Algiers is looking more likely."
Bloomberg Markets noted that "the face-to-face talks ... show diplomatic efforts to secure a meaningful deal in Algiers are still underway despite market skepticism."
But the optimism seems entirely unwarranted on a number of fronts, starting with Mohammed Barkindo, secretary-general for OPEC, who told the press that Algeria is merely a consultative process.
Mohamed Faraj Al Mazrouei, energy minister for the United Arab Emirates, agreed that "We're not meeting for a decision, we are meeting for a consultation, and we will see what that meeting produces."
Al Mazrouei also told reporters in Fujairah, "We need to be cautious not to do something that is a quick solution that is not going to last; we need to target something that is sustainable."
Presumably having heard the same kind of rhetoric preceding the other failed freeze talks, Christoph Eibl, co-founder and chief executive officer of Tiberius Group, reiterated the position taken by most analysts by stating, "The incentives for Saudi, for Iran are all the same: increasing output."
But as always, optimism continues to be expressed, and the latest voice comes from Abhishek Deshpande, chief energy analyst at Natixis SA, who thinks the chances of an agreement are better now as Iran is pumping at pre-sanctions levels: "A more combined effort to freeze oil output at current levels for next year will help provide stability; Iran is unlikely to add extra production anyway."
Left unsaid this week is the fundamental argument from analysts that record-level output will render a freeze meaningless anyway; plus, as Chris Brankin, CEO, TD Ameritrade Asia, recently remarked, "I don't think anyone trusts that OPEC can come to some type of solution."
