Opec in bid to rescue output limits deal
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 were due to make recommendations to their ministers on how exactly the cartel should reduce production when it met tomorrow.
Meanwhile, the Algerian and Venezuelan oil ministers were to travel to Moscow yesterday and today in a final attempt to persuade Russia to take part in cuts instead of merely freezing output.
In September, Opec agreed to cap output at about 32.5million to 33 million barrels per day (bpd) versus the current 33.64million bpd to prop up oil prices, which have more than halved since mid-2014. The meeting tomorrow is expected to rubber-stamp that deal, with Russia and other non-Opec producers also contributing.
But doubts emerged in recent weeks as Opec’s secondand third-largest producers, Iraq and Iran, expressed reservations about the mechanics of output reductions and Saudi Arabia voiced concern about Russia’s willingness to cut.
Last Friday, Opec cancelled an experts meeting with non-Opec producers scheduled for yesterday after Saudi Arabia said the organisation needed to sort out its differences first.
Over the weekend, Saudi’s Energy Minister, Khalid al-Falih, said oil markets would rebalance even without an output-limiting pact. That contrasted with his previous statements, in which he had said Riyadh was keen for a deal.
Doubts about Opec’s ability to deliver promised cuts sent Brent crude down 2percent initially yesterday to less than $47 (R653) per barrel, though prices later recovered.
Some analysts including Morgan Stanley and Macquarie said oil prices would correct sharply if Opec failed to reach a deal, potentially going as low as $35 per barrel.
As Opec experts turned up at the group’s headquarters yesterday, one delegate who had previously stated that a deal would be done, said this time: “I am not sure.”
Another delegate, asked about the prospects for a deal, said: “Nobody knows yet”.
Opec ministers started arriving in Vienna on Sunday for the group’s regular twiceyearly talks but Saudi Arabia’s Falih was not expected to land before this evening.
Iranian news agency MEHR published an editorial on Sunday accusing Saudi Arabia of declaring a “war on oil prices” and reneging on its promises to limit output. – Reuters