Ole Hansen, head of commodity strategy at Saxo Bank, said in an interview in Dubai on Thursday (November 17) that if OPEC fails to limit production at the Vienna meeting later this month, it will face oil prices as low as $40 a barrel.

At the same time, Hansen believes that Russia may not join in the production reduction, but may freeze production. "If OPEC can reach an agreement to cut production by at least 1 million barrels per day, it may push oil prices to $50 per barrel, and may reach $55-60 next year due to increased demand," he said.

On September 28 this year, OPEC reached a framework for the first production reduction agreement in eight years at an internal meeting in Algeria, limiting production to 32.5-33 million barrels per day, helping to push oil prices up to $53.73 per barrel last month.

However, with Iraq joining Iran in demanding exemption from production cuts, fund managers have been less bullish on the crude oil market in the past four weeks. According to Bloomberg, OPEC will complete the production reduction agreement this month, but will not set a production cap for each country required to implement the agreement.

"We think they're going to cut production because they have to, or we're going to see $40 in oil prices," Hansen said.

OPEC has been trying to persuade non OPEC countries to join in the production reduction and has held talks with oil producing countries such as Russia. OPEC Secretary General valgindo has said he believes the group's decision to limit collective production to between 32.5 million and 33 million barrels per day will reduce inventories and bring the oil market into balance ahead of time.

For Russia, Hansen added, "I don't think they're going to cut production. I expect them to freeze."