An important meeting took place in Vienna on Monday as oil producers looked to try and make a rescue deal which would place limits on the production of oil in order to try and rebalance the oil market prices.
OPEC, the group who are accountable for around a third of the World's oil met up with their member countries and non-member nations like Russia to try and thrash out a deal that would see the World's oil production capped. Oil production leader Saudi Arabia however remain confident that the markets would balance themselves out even if a deal could not be struck.
In September, the Organization of the Petroleum Exporting Countries (OPEC) agreed to cap their production levels at 32.5 million to 33 million barrels per day in contrast to the current 33.64 million to prop up oil prices which have seen a fall by almost 50% since 2014. The meeting which also saw non-OPEC members like Russia, Kazakhstan and Azerbaijan taking part had been expected to finalize a deal although it would appear as though that deal now looks in danger as Saudi Arabia have gone back on their previous support to strike a deal to limit production.
The impact that the oil prices around the World have on global economies are numerous, many government bonds and interest rates are altered based on the import and export of oil, affected also is the forex market which sees currencies rise and fall often based on large scale impacts like oil investment can have on economies and global markets.
The proposed cuts by OPEC sent the cost of a barrel of oil on Monday down by 2% to $47 per barrel, quite a contrast from the stead $100 per barrel that we saw throughout 2013/14. Analysts at Morgan Stanley have even gone so far to suggest that unless a deal is struck, the price of oil could even go down as low as $35 per barrel.
The World's top producers of oil, and ultimately the most powerful when it comes to these kinds of talks that will influence the industry are Saudi Arabia, United States, Russia and China. The key states however are those who export the most oil, Saudi Arabia, Iraq, Russia, and the United Arab Emirates, these are the members who will play the biggest part in any deal that may be found and with disarray in both Iraqi opinion and that of Saudi Arabia, it is suggested that a deal at this stage may seem unlikely.
As the talks reach their final days, the outcome of the deal still hangs in the balance, RBC head of global commodities strategy stated:
"It's not so easy for them to walk away now. The problem for all of these countries is if you don't get it done on Wednesday, you can't jawbone this market any more. You're done. You're going to need to find a new trick next year,”
As a result of the stall in the talks it is not just the oil markets which are facing uncertainty, global economies are unstable as the members and non-members of OPEC seek to finalize their discussions.