The world's largest oil producers are gathering in Algeria, but investors shouldn't expect a production freeze, at least not right now.
"Comments from the Iranian oil minister [on Tuesday] calling this just a consultation meeting and that any decisions should be made at an official OPEC meeting says it all; that's game over in terms of any decision being made," said Jasper Lawler, a market analyst with CMC Markets, based in London.
Lawler attributed Wednesday's 1% rise in oil prices to expectations that Saudi Arabia may eventually agree to a freeze deal. "It does seem like Saudi Arabia has softened their negotiating position a bit and it looks like, probably not Wednesday, but at some future meeting, they are going to be willing to cut production in order to bring Iran to the table and actually agree to some sort of freeze."
Iran is looking to boost oil production now that many burdensome sanctions have been lifted thanks to its nuclear deal with the West. Iran is currently producing 3.62 million barrels of oil a day, a far cry from the roughly six million daily barrels it produced back in 1974.
Saudi Arabia is producing a record 10.69 million barrels of oil a day and is fearful to give up market share, especially to rival Iran. But Lawler said Saudi Arabia may soon start to see the benefits of a production freeze deal.
"This week, we've heard there has been a big pay cut among Saudi politicians; they are physically bearing the brunt of this drop in oil prices," Lawler added.
Even if Saudi Arabia and Iran can put their rivalries aside, Nigeria and Libya are looking to boost production.
Libya said Tuesday it "would be expect to be exempt from any type of freeze agreement," Lawler said. That's because Libya is producing a paltry 260,000 barrels of oil per day, compared to roughly 3.3 million in 1970. Nigeria pumps 1.4 million barrels a day, compared to a peak of 2.45 million in 2005. These oil production figures were compiled by Bloomberg data.
OPEC's next official meeting is in November.