OPEC agrees ‘tentative’ oil cut but waits for Russia to commit

Falih says deal could still fall apart

VIENNA, Dec 6, (RTRS): OPEC tentatively agreed an oil-output cut on Thursday but was waiting to hear from non-OPEC 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 Saudi-led OPEC and the group’s allies.

The price of crude has fallen almost a third since October but US President Donald Trump has demanded the Organization of the Petroleum Exporting Countries make oil even cheaper by refraining from output cuts.

“We hope to conclude something by the end of the day tomorrow ... We have to get the non-OPEC countries on board,” Saudi Energy Minister Khalid al-Falih told reporters before the OPEC meeting started.

“If everybody is not willing to join and contribute equally, we will wait until they are.”

Asked whether OPEC could fail to reach a deal, 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 began around 1100 GMT and was still ongoing after 2-1/2 hours.

Brent oil futures fell as much as 5 percent to below $59 per barrel on fears that there could be no deal but later recovered somewhat, trading down 2 percent by 1325 GMT.

“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 on the sidelines of the OPEC meeting.

“It is unlikely to spark a meaningful price rally, but also will not be so dire either. In many respects it is the middle road, which may be the optimal solution,” said Sharenow, who helps manage a $15 billion commodities fund at the $1.77 trillion US investment management

Iran’s Oil Minister Bijan Namdar Zanganeh (right), speaks to journalists as he attends the 175th Conference of the Organization of Petroleum Exporting

Countries (OPEC) in Vienna, Austria on Dec 6. (AFP)

firm.

OPEC delegates have said the group and its allies could cut by 1 million bpd if Russia contributed 150,000 bpd of that reduction. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.

Novak said on Thursday that Russia would find it harder to cut oil output in winter than other producers because of the cold weather.

Oil prices have crashed as Saudi Arabia, Russia and the United Arab Emirates raised output since June after Trump called for higher production to offset lower exports from Iran, OPEC’s third-largest producer.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry.

Kuwait’s Minister of Oil and Electricity and Water Bakheet Al-Rashidi arrives for the 175th Conference of the Organization of Petroleum Exporting

Countries (OPEC) in Vienna, Austria on Dec 6. (AFP)