After several days of falling oil prices, the Organization of the Petroleum Exporting Countries expressed confidence that it would finalize an agreement to curb output later this month and dismissed critics who questioned its influence.
The unusual statement from the 14-member OPEC comes as oil prices have declined almost 8% since last weekend, when a series of meetings at the cartel’s headquarters ended in a deadlock. The group pledged at a September meeting in Algiers to cut production by as much as 2%, but left the details of which countries will trim and by how much until its next Nov. 30 gathering of oil ministers.
“We remain deeply optimistic about the possibility that the Algiers agreement will be complemented by precise, decisive action among all producers,” said the commentary section of the cartel’s monthly magazine, “OPEC Bulletin.”
OPEC’s statement came a day after the U.S. government said American oil held in storage last week had made the largest gains in over 30 years, suggesting the oversupply that far exceeds demand wouldn’t disappear soon.
Oil-industry traders and analysts have openly mocked OPEC’s ability to follow through on its deal in Algiers. Brent, the international benchmark for oil sold internationally, closed as high as $53.14 in the weeks after the Algiers agreement, but it has fallen in recent days, declining to $46.27 in London trading on Thursday afternoon.
Analysts have cut forecasts for oil prices, predicting they will rise in the next year but stay below $60 a year in 2017, according to a survey of 14 investment banks by The Wall Street Journal. Last summer, many of the same banks were predicting oil prices would rise to more than $70 a barrel this year—a level they now say won’t be reached until 2018.
In a note on Wednesday, Barclay’s analysts said OPEC was partly to blame for the fall in prices because of its record production. “Neither OPEC’s president nor its member countries have the ability to turn around the market sentiment ship around in the next three weeks,” Barclays said.
Scott Sheffield, the retiring chief executive of Pioneer Natural Resources Co., questioned whether OPEC’s members will reach a deal on production and then stick to it.
“I give OPEC a 40% chance of coming to an agreement,” Mr. Sheffield said Wednesday while talking to analysts during his last quarterly earnings call as Pioneer’s CEO. “If OPEC fails in this agreement we could easily see another year in the low $40s.”
OPEC warned “industry observers” against being “too quick to judge or criticize the organization or its members.”
“Over the years, we have seen how wildly inaccurate their predictions have been,” it said. “What many of them have failed to recognize is that OPEC’s great strength is its global reach and its diversity.”
The Algiers agreement to cut production has faltered over the position of some OPEC members.
Four countries—Iran, Iraq, Nigeria and Libya—have requested exemptions from the cuts. Iran and Iraq’s insistence proved the biggest sticking point in talks in Vienna over the weekend.
Iran wants to keep pumping until it reaches 4.2 million barrels a day, while Iraq says it needs to keep producing to generate revenues for an intensifying war against Islamic State.
The cartel has also struggled to get nations outside OPEC, such as Russia, the world’s largest oil producer, to commit to specific curbs. Russia, which is currently producing at record highs, has said it won’t even freeze output unless OPEC provides detailed figures of its own cuts.
Other non-OPEC producers declined to commit to cuts over the weekend after speaking with the cartel in Vienna.
OPEC reiterated Thursday that it needs non-OPEC producers to reduce production.
“OPEC cannot be expected to go it alone,” according to the statement.