OPEC members damped expectations over the weekend for an agreement to limit crude-oil output this month, as new pledges of increased production from several countries threatened to render any pact meaningless.

Mohammed Barkindo, the secretary-general of the Organization of the Petroleum Exporting Countries said late Saturday that no decision would be made at informal talks among the cartel's members in Algeria next week.

"It is an informal meeting, it is not a decision-making meeting," Mr. Barkindo told Algerian state media organization APS on Saturday night.

OPEC members are still scheduled to have informal talks on Sept. 28, the last day of the International Energy Forum, a petroleum-industry conference in Algiers. Mr. Barkindo said OPEC would try to reach a consensus on Action in Algiers and then could call an emergency meeting to make an actual decision if all members agree.

The oil market has been buoyed by hopes that OPEC, the 14-nation cartel that controls a third of the world's oil production, and Russia, the world's biggest producer of crude, would agree in Algeria to freeze output at current levels. Russian President Vladimir Putin had lent his voice in support of the freeze, which if enacted would be the first coordinated action to tackle a global glut of oil that has sent crude prices to historic lows.

Hopes that OPEC would resume its traditional role of propping up prices had sent slumping oil prices into a rally, entering bull-market territory in August and breaching $50 a barrel. But prices have fallen since as recent data show OPEC is actually producing near-record amounts of crude. U.S. prices hit a one-month low on Friday of $43.03.

The biggest problem facing OPEC advocates of a freeze are three countries—Libya, Iran and Nigeria—which combined want to increase their own output by about 1.5 million barrels a day this year.

Libya provided the most recent setback when top oil officials said they planned to quickly increase oil exports after control of several key ports changed hands in recent fighting. If the security situation remains under control, Libyan officials said the oil industry could produce up to one million barrels of oil a day, up from 280,000 a day in August.

"Definitely we will not agree to a freeze without reaching our quota from before," Libya's OPEC envoy Mohamed Oun told The Wall Street Journal, referring to 1.6 million barrels a day, the amount OPEC expected Libya to produce before the death and ouster of dictator Moammar Gadhafi sent the country into political chaos.

OPEC members had played down Libya's potential for a resurgence, saying the country's security situation remained volatile. Resumed fighting over the ports last weekend underscored those challenges, though ultimately a militia that has pledged to allow oil exports to flow beat back an attack from a rival.

In Nigeria, sabotaged pipelines have sunk output to historically low levels—1.5 million barrels a day in August, which is down 400,000 barrels a day from 2015. The country is expected to ship 250,000 barrels a day more in September after a cease fire with Niger Delta militants was achieved. Ultimately, Nigeria wants to return to its production to its stated capacity of more than two million barrels a day.

Iran, where the country is still coming back from sanctions that crippled its oil industry, has vowed to keep boosting its output until it reaches more than four million barrels a day—still about 400,000 barrels a day more than current levels.

Iran's President Hassan Rouhani said on Saturday his country would support any move to restore market stability but stopped short of saying Tehran would join it.

The concerns about its own members' production highlight the paralysis within OPEC. The cartel once saw its role as a price supporter, able to swing the market up or down by regulating its own production to match global demand. But an American oil boom made OPEC's production less relevant to prices, and OPEC members like Saudi Arabia are now instead competing fiercely to maintain their share of the market by pumping full tilt.

Their hope was that a prolonged period of low prices would flush out expensive-to-produce barrels in places like the U.S. and Canada, eventually bring down supply naturally. But OPEC's recent estimates show that American production has been more resilient than it expected, and the cartel increased its expectations of non-OPEC supplies this year and next.

John Hall, chairman of U.K. consultancy Alfa Energy, said a freeze exempting Iran, Nigeria and Libya would be "pointless." It would mean "others would have to cut production. Saudi would have to lead such a cut. And they wouldn't do it because that would mean giving back the market share they gained in the past two years."

An OPEC official brushed off those concerns, saying the Algeria talks were always seen as informal. The official said the Algiers talks could lay the groundwork for an agreement at OPEC's next official meeting on Nov. 30 in Vienna.

The Algiers meeting is aimed at "preparing the OPEC conference on Nov. 30," the official said. "We are still aiming for a freeze."

Hassan Morjea contributed to this article.

Write to Benoit Faucon at benoit.faucon@wsj.com and Summer Said at summer.said@wsj.com

 

(END) Dow Jones Newswires

September 18, 2016 21:15 ET (01:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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