Oil prices plunged anew as signs of discord reemerged between Iran and Saudi Arabia over an oil production freeze being pushed by the Saudis and Russia.
At a meeting of the OPEC oil cartel in Algeria on September 27, Iran rejected an offer by the Saudis to cut their oil production if Tehran agreed to freeze its output at its current level of 3.6 million barrels a day, OPEC officials said.
Iran continued to insist that it be free to increase production to levels attained before international sanctions were imposed in 2012 -- around 4 million barrels a day.
Despite the renewal of discord between the two regional rivals, Russia and Saudi Arabia remained hopeful that Iran and other members of the cartel would eventually join in an output freeze agreement.
"The gap between OPEC countries is narrowing," Saudi Energy Minister Khalid al-Falih said. "I remain optimistic on the basis of market fundamentals that are moving in the right direction and also on the producers coming to a common view."
Russian Energy Minister Aleksandr Novak, who did not formally attend the OPEC meeting but was present in Algiers for some meetings on the sidelines, said that while an output freeze remains elusive, he believes it would speed up the stabilization of oil prices by three to six months.
He said he supports an exemption from the freeze not only for Iran, which was crippled for years by sanctions, but for Nigeria and Libya, both nations whose production has been interrupted by fights against insurgencies this year.
"This is fair for Iran. First of all, we are talking about this country, as well as Nigeria and Libya, which saw a significant drop in production volumes this year as the result of force majeure. Individual approaches may also be applied to them," Novak said.
While Russia President Vladimir Putin recently came out strongly in favor of a production freeze to help stabilize the recession-stricken economies of Russia and other oil producers, Novak said Russia is waiting until the members of OPEC reach a consensus before resuming discussions on the mechanics of a freeze with the cartel.
"They need to discuss and make a decision. Then we will be ready to consider proposals from OPEC for countries outside the organization," he said.
While Saudi Arabia, Iran, and Russia all held out hope that agreement could be reached at OPEC's next meeting in November, global oil markets were disappointed by the failure to make progress in Algeria.
Premium crude prices fell about 3 percent on September 27 in London and New York trading, ending at $45.97 a barrel on the London commodity exchange. Prices recovered only marginally in Asian trading early on September 28.