OPEC makes last-ditch bid to save oil deal

Kuwait Times - - BUSINESS -

OPEC was try­ing yes­ter­day to res­cue a deal to limit oil out­put as ten­sions grew among the pro­ducer group and non-OPEC mem­ber Rus­sia, with top ex­porter Saudi Ara­bia say­ing mar­kets would re­bal­ance even with­out an agree­ment. OPEC ex­perts started a meet­ing in Vi­enna at 0900 GMT and were due to make rec­om­men­da­tions to their min­is­ters on how ex­actly the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries should re­duce pro­duc­tion when it meets on Nov. 30.

Mean­while, the Al­ge­rian and Venezue­lan oil min­is­ters were to travel to Moscow on Mon­day and Tues­day in a fi­nal at­tempt to per­suade Rus­sia to take part in cuts in­stead of merely freez­ing out­put, which has reached new highs in the past year.

In Septem­ber, OPEC, which ac­counts for a third of global oil pro­duc­tion, agreed to cap out­put at around 32.5-33.0 mil­lion bar­rels per day ver­sus the cur­rent 33.64 mil­lion bpd to prop up oil prices, which have more than halved since mid-2014. The meet­ing on Nov. 30 was ex­pected to rub­ber-stamp that deal, with Rus­sia and some other non-OPEC pro­duc­ers such as Azer­bai­jan and Kaza­khstan also con­tribut­ing. But doubts emerged in re­cent weeks as OPEC’s No2 and 3 pro­duc­ers, Iraq and Iran, ex­pressed reser­va­tions about the me­chan­ics of out­put re­duc­tions and Saudi Ara­bia voiced con­cern about Rus­sia’s will­ing­ness to cut. On Fri­day, OPEC can­celled an ex­perts meet­ing with non-OPEC pro­duc­ers sched­uled for Nov 28 af­ter Saudi Ara­bia said the or­gan­i­sa­tion needed to sort out its dif­fer­ences first. Over the week­end, Saudi En­ergy Min­is­ter Khalid al-Falih said oil mar­kets would re­bal­ance even with­out an out­put-lim­it­ing pact. He had pre­vi­ously said Riyadh was keen for a deal.

Doubts about OPEC’s abil­ity to de­liver promised cuts sent Brent crude down 2 per­cent ini­tially on Mon­day to less than $47 a bar­rel. Prices later re­cov­ered to trade up 1 per­cent af­ter Iraq’s oil min­is­ter said he re­mained op­ti­mistic.

Some an­a­lysts in­clud­ing Mor­gan Stan­ley and Mac­quarie have said oil prices will cor­rect sharply if OPEC fails to reach a deal, po­ten­tially go­ing as low as $35 per bar­rel.

As OPEC ex­perts turned up at the group’s head­quar­ters on Mon­day, one del­e­gate who had pre­vi­ously stated that a deal would be done, said this time: “I am not sure.” An­other del­e­gate, when asked about the prospects for a deal, said: “No­body knows yet”. Iraqi Oil Min­is­ter Jabar Ali Al-Luaibi, upon ar­rival in Vi­enna, de­clined to say whether Iraq was ready to cut out­put: “We are op­ti­mistic. We hope we (will) have agree­ment. We will co­op­er­ate with OPEC mem­bers to reach agree­ment ac­cept­able to all.”

OPEC min­is­ters started ar­riv­ing in Vi­enna on Sun­day for the group’s reg­u­lar twice-yearly talks but Saudi Ara­bia’s Falih was not ex­pected to land be­fore Tues­day evening, leav­ing lit­tle time for tra­di­tional pre-meet­ing dis­cus­sions with peers.

Ira­nian semi-of­fi­cial news agency MEHR pub­lished an edi­to­rial on Sun­day ac­cus­ing Saudi Ara­bia of declar­ing a new “war on oil prices” and reneg­ing on its prom­ises to limit out­put. The tone con­trasted with Ira­nian news agen­cies’ more up­beat cov­er­age of OPEC’s in­for­mal meet­ing in Septem­ber in Al­ge­ria, when the ini­tial deal was reached. — Reuters

VI­ENNA: Iraq’s Min­is­ter of Oil Jabar Ali AlLuaibi speaks to jour­nal­ists at a ho­tel in Vi­enna yes­ter­day. —AP

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