Less than 24 hours before the freeze talks in Algeria get underway, Saudi Arabia and Iran have quashed any hopes for a deal to be made and are already earmarking the November 30 meeting of OPEC as the new lead-up for more production cap rhetoric, conflicting messages, and empty promises.
As was the case with past talks, both countries as well as Russia and other OPEC members have issued increasingly ambivalent statements about their willingness to curb production as the September 28 meeting date drew nearer; earlier this week, Russia declared it will boost instead of limit production next year, to a collective 2.6 % rise.
Plus, an unnamed source for the country's top producers, stated: We think that it is impossible to agree ... no one trusts anyone, everyone has been just ramping up production.
Media on Tuesday quoted Khalid al-Falih, energy minister for Saudi Arabia, as saying: This is a consultative meeting ... we will consult with everyone else, we will hear the views, we will hear the secretariat of OPEC and also hear from consumers.
To which Bijan Zanganeh, oil minister for Iran, added: It is not the time for decision-making.
Zanganeh then mentioned the next formal OPEC meeting in Vienna on November 30: We will try to reach agreement for November.
Rivalry between the two countries scuttled the last freeze deal earlier this year, although by that time analysts weary of both parties suggesting that a deal could be reached and then revoking their statements openly wondered why the talks were taking place.
An even greater degree of cynicism greeted the lead-up to Wednesday's event, the high point of which occurred last week when it was reported that the Saudis had offered to cut oil production if Iran agreed to cap its own output - a report that soon proved to be erroneous.
Christoph Eibl, co-founder and chief executive officer of Tiberius Group, echoed the sentiments of his colleagues by remarking: The incentives for Saudi, for Iran are all the same: increasing output.
Gary Ross, founder of U.S.-based think tank PIRA, suggests that the Algeria summit was doomed to be an exercise in futility because Saudi output has risen too steeply in recent months, and even if it were cut to pre-summer levels, Iran would view an offer to freeze its own output as unfair.
He said of the Saudi strategy: It is a carefully calculated offer because Saudi Arabia knows it will not be acceptable to Iran ... Saudi Arabia wants to put the blame of OPEC inaction in Algiers on Iran. There will be tremendous political and revenue pressure on Iran to do a deal, but PIRA thinks it unlikely Iran will accept the Saudi offer for it clearly does not pass President Hassan Rouhani's fairness test.
Indeed, if Iran is to suggest anything during today's summit, it will be to reiterate its frequently-stated objective to ramp up production to around 4.1 or 4.2 million barrels per day (bpd) in order to maximize its post-sanctions return to the international market (it is currently hovering at 3.6 million bpd).
But those who prefer sentiment over action can take solace over remarks made by the ever-optimistic Emmanuel Ibe Kachikwu, oil minister for Nigeria; he told CNBC that honesty will be the real benefit emerging from Algeria.
He said: Honesty about what the real factual situations are, specific actionable points at the end of it all on what needs to happen, willingness of all the blocks to come together and find a joint solution not to leave it to one block to carry the can. That's real progress.
Meanwhile, Goldman Sachs maintains that the global oil glut will continue regardless of any talks, and it estimates that returning supply from Iraq, Libya, and Nigeria would be more relevant to the oil rebalancing than an OPEC freeze.
