Opec agrees to production cut

Oil cartel Opec tentatively agreed to an oil output cut on Thursday but was waiting for a commitment from nonOpec heavyweight Russia before deciding the exact volumes for a production reduction aimed at propping up crude prices, two sources from the group said.

Russian Energy Minister Alexander Novak flew home from Vienna earlier for talks with President Vladimir Putin in St Petersburg. Novak returns to the Austrian capital on Friday for discussions among Opec and the group’s allies. Brent oil futures fell as much as 5 per cent to below $59 per barrel on fears that there could be no deal but later recovered somewhat, trading down 3.5 per cent by 1535 GMT. The price of crude has fallen almost a third since October but US President Donald Trump has demanded the Opec make oil even cheaper by refraining from output cuts. “If everybody is not willing to join and contribute equally, we will wait until they are,” Saudi Energy Minister Khalid Al Falih said.

Falih said all options were on the table. Possible output cuts by Opec and its allies ranged from 0.5-1.5 million bpd, and 1 million bpd was acceptable, he said. Opec’s closed-door meeting concluded after 4-1/2 hours without yielding concrete figures, several delegates said, adding that many countries including Iran, Libya and Venezuela were seeking exemptions from cuts.

“One million bpd may disappoint many. But should the cut be from a September or October baseline, rather than November, the net impact would be sufficient to limit storage builds,” Greg Sharenow, executive vice-president for Pimco, said.