Oil markets edged up in nervous trading on Wednesday ahead of the OPEC cartel’s meeting later in the day to thrash out an output cut and curb oversupply that has caused prices to more than halve since 2014.

International Brent crude was trading at $46.80 a barrel at 3.11am GMT, up 42c or 0.91% from its last close.

US West Texas Intermediate (WTI) crude was up 23c or 0.51% at $45.46 a barrel.

Traders said markets were jittery and prices could swing sharply in either direction, depending on developments at the Organisation of the Petroleum Exporting Countries (OPEC) meeting in Vienna.

Oil dropped nearly 4% the previous session over disputes between Saudi Arabia, Iran and Iraq regarding details of the planned cut.

Despite the disagreements, most analysts still expect some form of deal to emerge.

“We expect OPEC will reach an agreement…. We believe OPEC’s resolve in reaching an agreement remains strong,” ANZ bank said on Wednesday.

Analysts at Goldman Sachs, Barclays and ANZ agree oil prices would quickly rise above $50 a barrel should OPEC come to an agreement.

Without a deal, the consensus is for prices to fall to the low $40s.

Iran and Iraq are resisting pressure from Saudi Arabia to curtail production, making it hard for the group to reach a deal.

On Tuesday, tension rose after Iran wrote to OPEC saying it wanted Saudi Arabia to cut production by 1-million barrels a day, much more than Riyadh is willing to offer, OPEC sources who saw the letter told Reuters.

Iranian Oil Minister Bijan Zanganeh told reporters upon arrival at OPEC’s headquarters in Vienna that his country was not prepared to reduce output: “We will leave the level of production (where) we decided in Algeria.”

OPEC, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output at about 32.5-33 million barrels a day — versus the current 33.64-million barrels a day — to prop up prices.

OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output had been crimped by unrest and sanctions.

A potential compromise would be for OPEC to return to some form of member state production quota, instead of ordering outright cuts.

Although that would do nothing to end a global production overhang in which more crude is pumped than can be consumed, it could help balance the market in the long term as rising demand would gradually bring consumption to output levels. (Reuters)

•Photo shows OPEC General Secretary Mohammed Barkindo.

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