Saudi Ara­bia says 'not con­fi­dent' OPEC can reach agree­ment on cuts

Daily Messenger - - Biz -

VIENNA: OPEC mem­bers and other oil-pro­duc­ing coun­tries may not be able to agree a re­duc­tion in out­put to help shore up plung­ing prices, Saudi Ara­bia said on Thurs­day.

"No, I am not con­fi­dent," Saudi oil minister Khalid AlFalih told re­porters af­ter com­ing out of a meet­ing of the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries in Vienna.

"We re still de­bat­ing the dis­tri­bu­tion" of any pos­si­ble cuts, he added.

Iraqi minister Thamir Ab­bas Al Ghad­hban said de­lib­er­a­tions would con­tinue on Fri­day.

But he said: "We are hope­ful that an agree­ment can reached."

Un­usu­ally, the oil car­tel had scrapped a planned news con­fer­ence on Thurs­day at which the mem­bers had largely been ex­pected to an­nounce a new re­duc­tion in out­put to stem the re­cent sharp drop in the price of crude.

OPEC s 15 mem­bers had been meet­ing in the Aus­trian cap­i­tal on Thurs­day to de­cide what ac­tion to take, a day af­ter US Pres­i­dent Don­ald Trump took to Twit­ter to urge them not to cut out­put.

"Hope­fully OPEC will be keep­ing oil flows as is, not re­stricted. The World does not want to see, or need, higher oil prices!" said Trump, who has re­peat­edly ac­cused the car­tel of keep­ing prices ar­ti­fi­cially high.

The group is sched­uled to meet again on Fri­day, this time with other oil-pro­duc­ing coun­tries that are out­side the car­tel - - no­tably Rus­sia -- to co­or­di­nate a joint pol­icy.

Ear­lier, Saudi oil minister alFalih had said that a cut of a mil­lion bar­rels per day would be ideal.

"Ideally, ev­ery­one should join equally. I think that s the fair and eq­ui­table so­lu­tion," he said.

OPEC daily out­put stood at 32.99 mil­lion bar­rels in Oc­to­ber, ac­cord­ing to the In­ter­na­tional En­ergy Agency.

Nev­er­the­less, the vol­ume and dis­tri­bu­tion of the cuts will de­pend on the par­tic­i­pa­tion of Rus­sia, whose en­ergy minister Alexan­der No­vak is only ex­pected in Vienna on Fri­day.

No­vak, speak­ing from Saint Peters­burg on Thurs­day, said that his coun­try was watch­ing closely how the sit­u­a­tion was de­vel­op­ing.

But with Rus­sia head­ing into win­ter, "cli­mate con­di­tions" made it "much more dif­fi­cult (to cut out­put) than for other coun­tries," he said.

An­a­lysts took that as a hint that Rus­sia might only sign up to ad­di­tional cuts at a later date.

The price of a bar­rel of Brent, the Euro­pean benchmark, fell four per­cent to be­low $60 Thurs­day be­cause the pro­jected re­duc­tion of around one mil­lion bar­rels was be­low what mar­kets had been ex­pect­ing, said CMC an­a­lyst, David Mad­den.

OPEC min­is­ters re­acted to Trump s in­ter­ven­tion by telling him not to in­ter­fere.

"We don t need per­mis­sion from any­one to cut," Saudi minister Al-Falih said.

The US "is not in a po­si­tion to tell us what to do."

Nonethe­less, Saudi Ara­bia is in a del­i­cate po­si­tion, in the wake of the mur­der of op­po­si­tion jour­nal­ist Ja­mal Khashoggi.

Trump has con­tin­ued to sup­port the king­dom de­spite world­wide out­rage over the mur­der but he is at the same time keep­ing up the pres­sure for lower prices.

Iran, OPEC s third-big­gest pro­ducer, com­plained that it was the first time a US pres­i­dent was try­ing to tell OPEC what to do.

"They should know that OPEC is not part of their Sec­re­tary of En­ergy," said its minister Bi­jan Nam­dar Zan­ganeh.

Iran wants to be ex­empted from any cuts that are agreed.

Given the eco­nomic sanc­tions be­ing reim­posed by the United States, the Is­lamic repub­lic "(won t) join any agree­ment for cut­ting pro­duc­tion be­cause of the spe­cial sit­u­a­tion Iran faces," Zan­ganeh said. Zan­ganeh said the es­ti­mated sur­plus cur­rently on the mar­ket amounted to 1.3-2.4 mil­lion bar­rels per day.

Ideally, "the price would be bet­ter to stand at $60-70. That is ac­cept­able for most OPEC coun­tries."

Ne­go­ti­a­tions be­tween OPEC mem­bers are fraught, as some feel that Saudi Ara­bia wields too much clout in set­ting pol­icy.

Iran has ac­cused Saudi Ara­bia of be­ing in thrall to the US.

In a sur­prise move on Mon­day, Qatar -- which has been an OPEC mem­ber since

1961 -- said it would quit the car­tel next month in or­der to fo­cus on gas pro­duc­tion.

Doha ac­counts for only around two per­cent of OPEC out­put but the move caught the head­lines given the po­lit­i­cal over­tones. Qatar has been iso­lated by a group of coun­tries led by Saudi Ara­bia since June

2017, in the worst po­lit­i­cal fall­out be­tween the en­ergy-rich Gulf pow­ers.

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