National Post (National Edition)
OPEC+ recommends crude cuts, but no deal yet on size of reductions
Saudi Arabia, Russia in tough negotiations
A meeting of Saudi Arabia, Russia and other members of the OPEC+ group recommended an oil production cut, defying a Twitter plea from U.S. President Donald Trump to keep the taps open, but didn’t agree on how big any reduction should be.
The group secured Russia’s participation in six months of output curbs starting in January, Oman Oil Minister Mohammed Al Rumhy told reporters in Vienna as he left the meeting on Wednesday. Although the committee didn’t discuss specific cuts, there’s still time to agree on numbers and the final deal could remove about 1 million barrels a day from the market, he said.
Ministers from the core OPEC group, which doesn’t include Russia, will now meet tomorrow to seek a consensus on exactly who will cut and by how much.
Saudi Arabia, Russia and the other countries of the so-called OPEC+ coalition are desperate to shore up oil prices after a slump of more than US$20 a barrel since October. But they’re contending with vociferous opposition from the U.S. president, who’s taken to using his Twitter account to berate the group’s policies and sees low oil prices as key to sustaining America’s economic growth. While ministers met in OPEC’S Vienna headquarters, Trump tweeted that the “world does not want to see, or need, higher oil prices!”
Oil pared gains after the meeting finished to trade at US$62.25 a barrel on Wednesday afternoon.
“There is little disagreement among OPEC members over the need to cut, but there is not yet consensus over how much,” said Amrita Sen at consultant Energy Aspects Ltd. “Communicating a large cut, if one can be agreed upon, will still be fraught with challenges given complicated U.s.-saudi relations.”
Iran is currently subject to U.S. sanctions and as such won’t participate in any curbs, the country’s OPEC governor Hossein Kazempour Ardebili said this week.
The last time the OPEC+ group agreed to curtail output, in late 2016, it settled on a combined 1.8 million-barrel-a-day reduction. Ahead of this week’s summit, delegates have said a cut of as much as 1.3 million barrels a day next year is needed as demand slows and U.S. output surges.
In private conversations, OPEC delegates said Russia and Saudi Arabia still differ on how to share the cuts. Saudi Arabia argued Russian proposals of a cut by Moscow of as much as 150,000 barrels day would leave the kingdom shouldering too much of the burden.
“Nobody wants to mention a number, because it means you’re committing yourself to to how much you’re going to cut,” said Al Rumhy. “Especially the big boys — they would want to keep this cut very close to their heart.”