OPEC energy ministers expressed optimism Thursday they were nearing a compromise on oil output policy, with Saudi Arabia acknowledging that a big production hike would be "politically unacceptable" to archfoe Iran.
The intensive negotiations between ministers in Vienna this week are the culmination of a process that has whipsawed oil markets for weeks.
But analysts said trade concerns and disagreements within the Organization of the Petroleum Exporting Countries (OPEC) over boosting supply continue to loom over the market.
Three Opec members - Iran, Venezuela and Iraq - have been reluctant to consent to a formal increase in Opec's output target, agreed as part of a deal with Russian Federation and other non-member producers and running until the end of 2018. That may seem insignificant in a global supply of 98 million barrels a day, but critically it would reverse reductions that the same countries approved in late 2016, helping push crude higher by more than 50 percent.
"The voice of the consumer is being heard in Vienna", Daniel Yergin, vice chairman of consultant IHS Markit Ltd., said in a Bloomberg television interview.
It showed that many nations have been lobbying behind the scene to enable them have their ways due to strong pressure from major consuming nations, especially the United States and China that prefer increased supply and lower prices. But on Thursday, Zanganeh again downplayed the likelihood of striking a deal. "This is a very good meeting".
But on Wednesday, Iranian Oil Minister Bijan Zanganeh said Opec members that had over-delivered on cuts should return to compliance with agreed quotas - a possible compromise to keep both the existing deal and produce more oil.
UAE Energy Minister Suhail Mohammed al-Mazrouei added: "I am very optimistic".
U.S. oil prices managed to stage a bounce this week after a rapid decline last Friday saw WTI crumple into 63.36 after lifting steadily into 66.80 for most of the week; with the technical bounce over oil has resumed drifting lower, though today's lift sees crude challenging the key 65.00 handle once again, a level that has become familiar in recent weeks.
As of Thursday afternoon, the two sides had not agreed on the size of any increase, said one delegate.
"Yergin said Saudi Arabia and the United Arab Emirates support the current, tougher US policy toward Iran, Saudi Arabia's rival for influence in the region, and so will want to support Trump's call for lower prices".
OPEC takes its decisions by unanimity, so if Iran were to wield its veto Saudi Arabia would be left only with the option of assembling a coalition of willing countries to bypass Tehran's opposition.
Saudi Arabia and its allies estimate that total cuts now amount to 2.8 million barrels. In reality, because many countries that have cut the deepest can't increase production, that would probably translate to just 600,000 barrels a day of crude flowing back on to the market.