Slow dance of oil prices

  Oil price is trembling close to $45 per barrel, tired and discouraged by disagreement between Riyadh and Tehran. In Algeria, producers are still discussing commodity markets, but a freeze of output in OPEC is delayed until the next meeting in Vienna. This November will solve two global problems: Hillary or Donald in the White House, to freeze or not to freeze the oil production. We will see the results of elections in the U.S. for sure. However, oil market does not run like clockwork. Three powers affect the oil flow in the autumn: Saudis, Iranians, and Russians.
1)  Russia initiated discussion of freezing output in April in Doha. The idea was spread from Riyadh. The kingdom planned to force Iranians to slow down pumping, using Moscow as a buffer. The plan failed, Tehran has insisted on a rush, greedy for petrodollars after four-years-diet. Kremlin was ready to send his representatives to Algeria, but on September 27 OPEC explained that only OPEC members are welcome at the next day OPEC meeting. Russians always pursue their goals; they lost the market share and will try to fight it back. Saudis gave them a reason to neglect an agreement, even if it would be reached.
2)  Iranians are working hard. Tehran targeted to produce 4.2 million barrels per day, and it is coming close to the target. Iran pumps 3.6 million barrels every single day this autumn, proud to deliver the product to Greece, Spain, and India. Iran would like to convince OPEC to allow it to achieve 12.7% of the group’s production. On September 23 Iran’s parliament (The Islamic Consultative Assembly) finally agreed on a new model for foreign contracts. Ownership of in-ground reserves for foreign operators is coming soon. The new model will encourage cooperation with Iran and will attract more followers to the Persian oil. So why a freeze output will interest Tehran? Nothing personal, it is just business.
3)  Saudis produced in August 7.622 million barrels per day. The kingdom starts cutting salaries and slashing ministry budgets. Riyadh will offer bonds by approximately $10 billion to the markets. The cutting and slashing reflect consequences of boosting OPEC’s oil output to 33.7 million barrels daily since November 2014. Saudi Arabia needs to count money and reconsider ways to cover gaps in the budgets in the period of low oil prices. To ease the tension and to strength consumer confidence Saudis are going to freeze the output. UAE, according to the energy minister Suhail bin Mohammed al-Mazroui, ready to support the decrease of the volume of barrels from OPEC. They are friends indeed, Riyadh and Dubai. However, they do not mean to please Tehran, not at all. The glut will go on if Iranians will continue pumping as they do.
Thus, there will be the fight in Vienna in November. Meanwhile, the oil price will dance around $45 per barrel.