IHS Markit's Dan Yergin: OPEC Only Reached An 'Agreement To Agree'

The price of oil spiked higher on Thursday following reports that OPEC member nations have agreed to freeze oil output. However, according to IHS Markit Vice Chair Dan Yergin, an agreement wasn't in fact reached on Wednesday, rather an "agreement to agree."

Speaking as a guest on CNBC's "Squawk Box" on Thursday, Yergin pointed out the outcome of talks in Algiers was an "agreement to agree" on returning to the table in November to finalize details of an oil output freeze. He added there are many "big questions" that haven't been addressed in Wednesday's announcement. Most notably, does the "agreement to agree" call for a freeze in output levels or a reduction in level and what role will Iran and non OPEC members such as Russia play?

Related Link: Pisani: Lots Of "Skepticism" Surrounding OPEC Agreement

Yergin further suggested that the OPEC representatives were "locked up in Algiers and they weren't going to be let out until there was some kind of agreement" or "some kind of signal."

When asked what the fair price of oil should be based on supply and demand, Yergin answered that oil may have established a range of comfort in the $40 to $55 a barrel range. An OPEC agreement could boost the lower end of the range from $45 to $55.

Bottom line, Yergin said that Wednesday's announcement isn't from an official OPEC meeting, rather it is OPEC members "negotiating to negotiate."

"I think the price will wobble, but it certainly keeps more support than walking away with nothing. What I think is this will be a process," he concluded.

Year-to-date, United States Oil Fund LP (ETF) USO is down 1.18 percent, but up 3.23 percent over the last five trading days. iShares MSCI Saudi Arabia Capped ETF KSA is down over 4 percent in the last five trading days and down over 14 percent year-to-date.

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