Oil prices drop as Iran dims hopes for deal on output freeze

ALGIERS, Algeria -- Iran played down hopes Tuesday a deal to limit oil production will emerge this week in a meeting in Algeria, prompting big falls in oil prices.

Speaking in Algiers at a meeting of oil producers from all around the world, Iranian Petroleum Minister Bijan Namdar Zanganeh said an informal gathering of OPEC oil ministers due today is "just a consultation meeting. ... If there is a decision, it should be taken at the next (OPEC) meeting in Vienna in November."

In the wake of his comments, the U.S. contract for crude oil was down $1.08, or about 2.3 percent, at $44.85 a barrel, having traded roughly flat earlier in the day. Brent, the international standard, was down $1.16, or 2.5 percent, at $44.76 a barrel.

Iran is likely to play a pivotal role in any decision by the Organization of the Petroleum Exporting Countries to limit production in an attempt to get oil prices higher. Iran has increased output since international sanctions over its nuclear program were lifted earlier this year as it looks to recover market share.

Saudi Arabia, the world's biggest oil producer and Iran's rival within OPEC, appears to be more amenable to some sort of production limit, certainly more so than in April when OPEC failed to agree on measures to curb supplies.

Saudi Energy Minister Khalid Al-Falih promised to "support any decision aimed at stabilizing the market."

Oil prices are way lower than where they were a couple of years ago. After shooting up to more than $100 a barrel in mid-2014, they began a slide down to below $30 at the start of this year.

A number of factors have weighed on prices including worries over the scale of the economic slowdown in China. High supply levels from OPEC countries, notably Saudi Arabia, as they seemingly strove to drive U.S. shale gas producers out of business, also were central to the descent.

Though low oil prices certainly have driven many out of business, they are hurting the finances of all producers, notably the likes of Venezuela and Nigeria.

One potential ally for Saudi Arabia is Russia, the world's No. 2 producer. Earlier this month the pair said they would act together to stabilize global oil output. Details though remain vague.

Russia is not an OPEC member, but the country's energy minister, Alexander Novak, is in Algiers for the meeting of oil producers. He said he will meet with his Iranian counterpart to discuss "potential coordination and actions on the market," according to the Tass news agency.

Despite shrinking hopes for a deal on freezing output levels, Algerian Prime Minister Abdelmalek Sellal urged participants to overcome their differences to reach a "balanced price." And Algerian Energy Minister Noureddine Bouterfa remains optimistic.

"The leaders of OPEC are aware of the fact that the current situation is no good for anyone. We are confident there will be an accord tomorrow," he said Tuesday.