OPEC waits on Rus­sia for oil out­put re­duc­tion

Shanghai Daily - - BUSINESS - PE­TRO­LEUM (Reuters)

OPEC has ten­ta­tively agreed an oil out­put cut but was wait­ing to hear from non-OPEC heavy­weight Rus­sia be­fore de­cid­ing the ex­act vol­ume.

Rus­sian En­ergy Min­is­ter Alexan­der No­vak flew home from Vi­enna ear­lier for talks with Pres­i­dent Vladimir Putin in St Peters­burg. He re­turns to the Aus­trian cap­i­tal to­day for fur­ther dis­cus­sions.

“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 yes­ter­day.

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. Pos­si­ble out­put cuts by OPEC and its al­lies ranged from 0.5-1.5 mil­lion bpd.

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 Rus­sia would find it harder to cut oil out­put in win­ter than other pro­duc­ers be­cause of the cold.

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 third­largest pro­ducer.

The US is not part of any out­put-lim­it­ing ini­tia­tive due to its anti-trust leg­is­la­tion and frag­mented oil in­dus­try.

Ira­nian ex­ports have plum­meted after the United States im­posed fresh sanc­tions on Tehran in Novem­ber. But Wash­ing­ton gave sanc­tion waivers to some buy­ers of Ira­nian crude, fur­ther rais­ing fears of an oil glut next year.

Ira­nian Oil Min­is­ter Bi­jan Zan­ganeh said he would sup­port a cut as long as Iran did not need to re­duce its own out­put.

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