OPEC works on deal to cut output by 1.3m bpd
Iran will not discuss its OPEC quota as long as it is under sanctions, Iranian Oil Minister Bijan Namdar Zanganeh said on Wednesday. “As long as Iran is under sanctions, the Islamic Republic’s OPEC quota will not be discussed with anyone,” Zanganeh said, speaking ahead of a meeting of the Organization of Petroleum Exporting Countries in Vienna which is due to debate oil production cuts, Reuters reported.
OPEC meets on Thursday, followed by talks with allies such as Russia on Friday, amid a drop in crude prices caused by global economic weakness and fears of an oil glut due largely to a rise in US production.
The exporters’ group and its allies, known as OPEC+, see themselves at the same juncture they did in 2016. However, this time there is less certainty of a consensus to cut amid the exit of Qatar on January 1. Qatar was on board in 2016 when OPEC agreed to reduce inventories by slashing 1.2 million barrels per day out of its production. On top of that, allies cut 600,000 bpd.
Four sources said OPEC+ is working toward a deal to reduce oil output by at least 1.3 million barrels per day. The sources added that Russia’s resistance to a major cut was so far the main stumbling block.
Qatar said on Monday it will quit OPEC to focus on gas in a swipe at Saudi Arabia, the de facto leader of the oil exporting group which is trying to show unity in tackling an oil price slide.
Reacting to Qatar’s decision to pull out, Zanganeh said on Tuesday OPEC has problems with some oil producers, and the reasons for Qatar’s exit from the organization must be examined.
“Examining the reasons for Qatar’s exit from OPEC is a necessity,” Zanganeh said. “OPEC has big problems from some oil producers which Qatar is not a part of.”
Zanganeh did not elaborate but he appeared to be noting that Qatar is not one of the problematic oil producers in OPEC.
In an interview with Bloomberg on Tuesday, Falih said Moscow backs output curbs “in principle,” but it’s “premature” to say what they will agree to in Vienna this week.
Meanwhile, Falih met with US special representative for Iran, Brian Hook, in Vienna on Wednesday, sources familiar with the meeting said.
US President Donald Trump has urged Saudi Arabia to refrain from output cuts in order to keep oil prices low. He said higher oil supplies were a payback from Riyadh for US support for Saudi Arabia against Iran.
The United States reimposed sanctions on Tehran last month. The measure has severely reduced Iranian oil flows and Washington has said it wants ultimately to drive Iranian shipments down to zero.