Crude may slip to $40/barrel if Algeria meet a 'no-deal': Expert

A no-deal between producers at the Organisation of Petroleum Exporting Countries' (OPEC) ongoing Algeria meet may cause prices to slip to even below USD 40 a barrel, feels Amrita Sen, Chief Oil Analyst at Energy Aspects.

Algeria meeting may not yield an agreement to cut output, she says.

However, if a deal is struck it could shoot up above USD 60 a barrel, she says in an interview to CNBC-TV18. She points to the pick-up in construction, revival in diesel demand and supplies coming off in non-OPEC leading to fall in inventory, which could also lift prices.Below is the transcript of Amrita Sen’s interview to Manisha Gupta on CNBC-TV18.Q: What is your first reaction from all the noises, statements that we are hearing from Algiers?A: Our view has been that they are a lot closer particularly Saudi Arabia and Iran when it comes to actually coming together and putting together a deal. The deal on the table is that Saudi Arabia will cut production that is freeze that channel which is going to be a cut from current levels but only if Iran freezes at 3.6 million barrels a day. That is the bottleneck and Iran is not agreeing to that. That has been our view for over a month now from all the conversations that we have been having. So, nothing really has changed other than the fact that this is a shift in Saudi policy and that they are now willing to cut production. But like you said, I do not think you are going to get a deal just yet and probably not in Algeria. It is more likely that we get a deal in the November Organization of the Petroleum Exporting Countries (OPEC) meeting.Q: Even if that happens in November OPEC meeting, which is like a couple of months away as of now, are you really looking at an output cut or is it going to be more like a freeze? How do you see most of these oil producers move on that?A: Like I said, the media is focusing on the word freeze because that is what people are talking about. But you need to look a bit beyond headlines over here and all the talks have been very much that the freeze would be at January levels. In January, Saudi Arabia produced 10.2 million barrels per day. In August, Saudi Arabia’s production was 10.7 million barrels per day. So, people can work that out. That is effectively a cut of 5,00,000 barrels per day.