Having briefly dipped under $40, oil quickly rebounded over the past few days after the now traditional rumors of an "imminent" OPEC oil supply cut re-emerged, with the catalyst this time supposedly being the informal meeting set to take place next month in Algeria. Alas, this "plan" to push the price higher appears to have just suffered a terminal setback after Oman announced it would not participate in a meeting of oil producers and consumers in Algeria next month "as it is disappointed by the group's failure to address the issue of low oil prices" the Minister of Oil and Gas Mohammad bin Hamad al-Rumhy said on Wednesday, cited by Reuters.
The International Energy Forum, which groups producers and consumers, is due to meet on Sept. 26-28 in Algiers. Qatar said on Monday that OPEC members had agreed to hold talks on the sidelines, which served as a substantial upside catalyst to WTI and Brent.
Alas, any credibility OPEC may have left evaporated when Oman, a small non-OPEC oil producer, said that it doesn't "see the point of continuing to be part" of the group, Rumhy told Reuters in an interview in Muscat.
"We are moving into difficult times, and others still believe that everything will be fine."
Taking a clear shot at Saudi Arabia, Rumhy said that "those who expected the expensive oil producers will be run out of the business and shut down their operations, have been proved wrong."
Rumhy added: "There were hopes of seeing the impact of fewer investments in oil and gas, and less exploration, on supply and demand with hopes that this might affect the low oil prices. But that didn't happen, and there has been no positive impact on oil prices."
As a result, he said, producers would have to tighten their belts further or find some way to prop up prices by revisiting the idea of freezing production. Oman has reduced state spending as it grapples with a big budget deficit caused by cheap oil.
Meanwhile, the country whose ultimate decision for any credible oil production freeze, Saudi Arabia, not only announced it produced a record amount of oil, but has already seen its economy reeling as a result of low oil prices to the point where some 16,000 foreign workers, mostly in the construction industry, are left stranded in the dessert with no jobs, money or prospects how to get back home. Of course, there is always the risk that Saudi Arabia will turn its back on the strategy it unveiled at the 2014 OPEC Thanksgiving meeting, and curb output, although as of this moment, the odds of that happening are about the same as the Fed hiking next month.
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