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Until recently, Iran was portrayed as the "black sheep" of major oil producer group OPEC, having previously rejected plans to cut or freeze production – but now Iraq is increasingly looking like the potential dissenter in the 14-member organization.
On Wednesday, Reuters reported that Iraq – OPEC's second-largest producer – had invited a host of influential organizations and media groups to the country in late October to assess its oil production levels.
The move comes ahead of potential wranglings between OPEC members over output allocations, following a deal agreed in late September to cut production to between 32.5 million and 33.0 million barrels per day (bp/d).
OPEC's output was estimated to be at 33.24 million bpd in August, so the deal effectively re-establishes a production ceiling largely ignored in the last year.
The agreement was also surprising because Iran – which has previously refused to consider cutting its own oil production – appeared to be on board. However, the finer details of the deal – notably, the awkward part ascertaining who will actually cut output to meet the reduced output level – have yet to be agreed.
Amrita Sen, chief oil analyst at Energy Aspects, told CNBC Thursday that while OPEC as a whole (and specifically the group's de facto leader Saudi Arabia) was definitely keen on achieving higher oil prices by cutting back on supply, Iran could be the risk factor.
"The message is very clear that OPEC is keen on high prices and there is a lot of pressure on them to act," Sen said.
"Iraq has already thrown a spanner in the works which we've been highlighting as well, and that is a risk at the moment – but they do need to come up with coordinated action," she said, adding that "there are a lot of challenges to be ironed out."
"The only good news for markets is that Saudi Arabia needs and wants higher prices … But they're not going to cut unilaterally, they will still need something from others."
OPEC tensions have traditionally focused on geopolitical rivalry between Saudi Arabia and Iran, so the agreement last month was welcomed by oil markets. However, Iraq's apparent unease over the deal could render it unworkable.
Sources within OPEC told Reuters on the sidelines of the Algeria meeting last month that Iraqi Oil Minister Jabar Ali al-Luaibi was not happy with the idea of OPEC re-establishing an output ceiling.
The minister also publically expressed doubt over the methods that OPEC uses to estimate the oil output figures of its members, saying that it underestimates the size of Iraq's output.
Last month, Iraq said it produced 4.638 mb/d in August, but secondary sources cited in OPEC's monthly report put the figure at a lower 4.354 mb/d.
In the meantime, oil markets are waiting for more details on the OPEC deal to emerge and are hanging on to inventory data for signs of a rebalancing in oil market supply and demand.
Oil prices dipped on Thursday after hitting their highest levels since June on Wednesday as the U.S. Energy Information Administration (EIA) reported another weekly drawdown in crude inventories.
Analysts had been expecting a build of around 2.6 million barrels, but crude inventories confounded forecasts by falling for a fifth consecutive week, declining by 3 million barrels to 499.74 million barrels. On Thursday morning, benchmark Brent crude for December delivery was trading at $51.53 a barrel while U.S. West Texas Intermediate (WTI) was trading at $49.50 a barrel.
Energy Aspects' Sen told CNBC that if OPEC were to cut production back by as much as 700,000 barrels a day, "it would really wipe out all the inventory overhang that we have."
If producers did not follow through on the deal (she put the probability still at 50/50), however, she noted that oil prices could resume their decline.
"If they don't come up with a deal, OPEC production will remain at record levels and the rebalancing is going to take a lot longer … And prices could go down to below $40 (a barrel). Imagine if we get a mild start to the winter and OPEC don't cut, there's going to be some real risk to the downside for prices by year-end," she added.
Uncertainty around the oil price has risen again with the prospect of another informal meeting between OPEC and non-OPEC producers on the sidelines of the World Energy Congress in Turkey next week.
Algerian Energy Minister Nouredine Bouterfa told Algeria's Ennahar TV in an interview due to be broadcast Thursday, and reported by Reuters, that OPEC producers will discuss the implementation of their output deal in Istanbul. This would be ahead of the group's next official meeting on November 30.
Valentijn van Nieuwenhuijzen, head of Multi-Asset Strategy at NN Investment Partners, told CNBC that oil markets were still taking the producers at their word.
"I'm not yet convinced," he told CNBC Thursday. "We've been here so many times and even if there is a deal, will they, in reality, comply with the production numbers that they formally agree upon? I think the incentives for many of them, many of the players in OPEC, are still (not enough for them) to live up to these promises."
He added that although verbal intervention was working for now, OPEC was "still quite likely to disappoint."