OPEC moves closer to oil deal as Iran gets of­fer

Rus­sia re­mains ‘op­ti­mistic’ over out­put agree­ment

Kuwait Times - - BUSINESS -

DOHA: OPEC is mov­ing closer to­wards fi­nal­iz­ing this month its first deal since 2008 to limit oil out­put, with most mem­bers pre­pared to of­fer Iran sig­nif­i­cant flex­i­bil­ity on pro­duc­tion vol­umes, min­is­ters and sources said yes­ter­day. Iran has been the main stum­bling block for such a deal be­cause Tehran wants ex­emp­tions as it tries to re­gain oil mar­ket share af­ter the eas­ing of Western sanc­tions in Jan­uary.

Iran’s ri­val Saudi Ara­bia, the big­gest pro­ducer in the Or­ga­ni­za­tion of the Pe­tro­leum Ex­port­ing Coun­tries, has ar­gued Iran’s out­put has peaked and it should not be granted ma­jor con­ces­sions.

On Fri­day, sev­eral OPEC oil min­is­ters in­clud­ing Saudi Ara­bia’s Khalid Al-Falih met in Doha on the side­lines of a gas fo­rum. Ira­nian of­fi­cials at­tended the gath­er­ing al­though min­is­ter Bi­jan Zan­ganeh did not come. At the meet­ing, OPEC mem­ber coun­tries pro­posed Iran cap its oil out­put at 3.92 mil­lion bar­rels per day (bpd), a source fa­mil­iar with the pro­posal told Reuters.

Iran has pre­vi­ously said it would ac­cept a freeze at be­tween 4.0 and 4.2 mil­lion bpd. Gulf OPEC sources have said they wanted Iran to cap out­put at around 3.6-3.7 mil­lion bpd - the vol­ume the Is­lamic Repub­lic is cur­rently pro­duc­ing, ac­cord­ing to OPEC es­ti­mates.

The source said Tehran had yet to re­spond to the pro­posal. Iran’s OPEC gov­er­nor, who at­tended yes­ter­day’s talks, said he was op­ti­mistic that the pro­ducer group would reach a deal when it gath­ers for­mally in Vi­enna on Nov. 30.

Falih said the Fri­day meet­ing went well, but de­clined fur­ther com­ment. If OPEC reaches a deal on Nov. 30, it may also draw sup­port from non-OPEC mem­bers in­clud­ing Rus­sia, which promised to co­op­er­ate but so far has re­frained from any firm com­mit­ment.

Rus­sia’s en­ergy min­is­ter said yes­ter­day he was “quite op­ti­mistic” the OPEC oil car­tel will reach an agree­ment later this month on a planned out­put cut to shore up prices.

Alexan­der No­vak was speak­ing af­ter in­for­mal talks in Doha with some but not all of his OPEC coun­ter­parts ahead of the car­tel’s meet­ing in Vi­enna on Novem­ber 30. The car­tel’s 14 mem­bers have been at odds over the de­tails of the pro­duc­tion cut agreed in Al­giers in Septem­ber, which is sup­posed to lead to a wider agree­ment with non-OPEC pro­duc­ers in­clud­ing Rus­sia.

Iran has re­fused to join in un­til it has re­stored its mar­ket share fol­low­ing the lift­ing of in­ter­na­tional sanc­tions in Jan­uary. Iraq has asked for an ex­emp­tion, say­ing it needs the in­come to fund its war against the Is­lamic State ji­hadist group. Asked whether he thought Iraq would agree to a freeze or cut at the Vi­enna meet­ing, No­vak said: “I would say that I am quite op­ti­mistic at this point.

“To­day’s dis­cus­sions... do in­stil op­ti­mism in me. “And I be­lieve that the con­sul­ta­tions of tech­ni­cal ex­perts, which are go­ing to be held soon, and other con­sul­ta­tions ahead of the 30th Novem­ber meet­ing... would re­sult in an agree­ment.” He also told re­porters that Rus­sia was will­ing to limit pro­duc­tion to “cer­tain lev­els”. “We be­lieve that de­mand will con­tinue to grow. “Even to­day we have dis­cussed num­bers that de­mand will grow by 1.1, 1.2 mil­lion bpd (bar­rels per day) next year.

OPEC min­is­ters agreed in Al­giers to re­duce pro­duc­tion to 32.5-33 mil­lion bpd from the 33.47 mil­lion pumped in Au­gust, the first cut in eight years.

Falih told the Al-Ara­biya news chan­nel in an in­ter­view aired on Thurs­day that he was “still op­ti­mistic that the con­sen­sus reached in Al­giers to put a ceil­ing to pro­duc­tion will be im­ple­mented by adopt­ing ceil­ings for coun­tries”. Al­ge­ria’s en­ergy min­is­ter Noured­dine Bouterfa said dis­cus­sions yes­ter­day had been “good” and that “maybe” 32.5 mil­lion bdp would be the pro­duc­tion tar­get spo­ken about in Vi­enna. Iraq and Iran have been asked to freeze their out­put lev­els.

BUTEMBO: A gen­eral view of the Bi­asa Mar­ket in Butembo. The high un­em­ploy­ment rate is con­sid­ered “nor­mal” by Gode­froid Kam­bere Ma­tim­bya, deputy mayor of the North Kivu province city of Butembo, which counts over a mil­lion in­hab­i­tants.

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