(MENAFN- AFP) Oil prices soared Wednesday on hopes that the OPEC oil cartel will defy gloomy expectations and agree their first output cut in eight years at tense talks in Vienna.
Brent North Sea crude for January delivery jumped $3.06 to $49.44 compared with Tuesday's close. US benchmark West Texas Intermediate for the same month won $2.17 to $47.40 per barrel.
As OPEC ministers began their meeting, Khaled al-Falih, energy minister of the cartel's biggest producer Saudi Arabia, sounded an upbeat note.
"We don't know (if a deal will be reached)," he said. "We will find out during the meeting. I think the sentiment generally is optimistic and positive."
- Devil in the detail -
But in comments likely directed at Iran and Iraq, more reticent about reducing the flow of crude, Falih said that cuts have to be shared around OPEC "in an equitable way".
Iraq's Oil Minister Jabbar al-Luaibi said he was "very optimistic we're going to come with very fruitful results... There will be a cut, yes, definitely," Bloomberg News reported.
In September the cartel agreed in principle to lower production to 32.5-33.0 million barrels per day (bpd), meaning a cut of between 600,000 and 1.1 million bpd.
Bloomberg reported that Algeria proposed Tuesday a cut by OPEC to 32.5 million bpd.
This would be aimed at reducing the massive supply glut that has depressed prices over the past two years and wreaked havoc with OPEC members' public finances.
But finalising the agreement has proven difficult, with Iran keen to increase oil output to pre-sanctions levels and Iraq short of money to fight Islamic State extremists.
Iran has suggested it freeze production at 3.975 million bpd, or about 200,000 barrels a day above current output, Bloomberg reported Monday.
- 'A clever game' -
Saudi Arabia countered with a proposal for Iran to cap output at 3.707 million.
If they fail to agree a deal, experts expect oil prices, already less than half their 2014 levels, to head further south perhaps to $40 or even $30.
In addition, it would deal a further blow to the already damaged credibility of the Organization of the Petroleum Exporting Countries.
Fawad Razaqzada, a market analyst at Forex.com, said that Iran was "playing a clever game" against its regional rival Saudi Arabia.
"They know full well that Saudi Arabia is desperate to see higher oil prices, despite the latter putting on a brave face," Razaqzada said.
Since OPEC's 14 members produce only a third of the world's oil, their ability to reduce the global supply glut and influence prices is limited.
But the cartel's efforts to convince other countries, not least Russia which pumps 11 million bpd, to reduce output as well have fallen flat.
Hit hard by the low prices and Western sanctions, Moscow has said it is ready to freeze output but not to cut it.
- Shot to bits -
While consumers might not welcome the more expensive fuel that a deal would bring, OPEC members' public finances have been shot to bits.
It has exacerbated an already desperate situation in Venezuela, and even hit fabulously wealthy Saudi Arabia hard.
The low crude price has also hit investment in oil facilities, raising the prospect of oil shortages and "shocks" further down the line, Emirati Energy Minister Suhail al-Mazrouei said.
Further downwards pressure on oil prices could come from the United States, where president-elect Donald Trump's promise to boost the domestic oil sector, leading to yet more crude flooding the market.
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