OPEC mem­bers ex­pected to cut oil out­put to sup­port price

With hes­i­ta­tions to shock the mar­ket and seek­ing to ap­pease U.S. Pres­i­dent Don­ald Trump, oil car­tel OPEC did not de­clare any def­i­nite amount of cut in the pro­duc­tion at yesterday’s meet­ing, lead­ing to a 3 per­cent slide in crude prices. The re­ports sug­gest

Daily Sabah (Turkey) - - Front Page -

THE Or­gan­i­sa­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) were gath­ered yesterday in Vienna to find a way to sup­port the fall­ing price of oil, with an­a­lysts pre­dict­ing the car­tel and key ally Rus­sia would agree to cut pro­duc­tion by at least 1 mil­lion bar­rels per day.

OPEC ten­ta­tively agreed on an oil-out­put cut yesterday but was wait­ing to hear from non-OPEC heavy­weight Rus­sia be­fore de­cid­ing the ex­act vol­umes for a pro­duc­tion re­duc­tion aimed at prop­ping up crude prices, two sources from the group said.

Rus­sian En­ergy Minister Alexan­der No­vak flew home from Vienna ear­lier for talks with Pres­i­dent Vladimir Putin in St Peters­burg. No­vak re­turns to the Aus­trian cap­i­tal to­day for dis­cus­sions among Saudi-led OPEC and the group’s al­lies.

The price of crude has fallen al­most a third since Oc­to­ber but U.S. Pres­i­dent Don­ald Trump has de­manded the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries make oil even cheaper by re­frain­ing from out­put cuts.

“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.

“If ev­ery­body is not will­ing to join and con­trib­ute equally, we will wait un­til they are.”

Asked whether OPEC could fail to reach a deal, Falih said all op­tions were on the ta­ble. Pos­si­ble out­put cuts by OPEC and its al­lies ranged from 0.5-1.5 mil­lion bpd, and 1 mil­lion bpd was ac­cept­able, he said.

OPEC’s closed-door meet­ing be­gan around 1100 GMT and was still on­go­ing af­ter 2-1/2 hours.

Brent oil fu­tures LCOc1 fell as much as 5 per­cent to be­low $59 per bar­rel on fears that there could be no deal but later re­cov­ered some­what, trad­ing down 2 per­cent by 1325 GMT.

“One mil­lion bpd may dis­ap­point many. But should the cut be from a Septem­ber or Oc­to­ber base­line, rather than Novem­ber, the net im­pact would be suf­fi­cient to limit stor­age builds,” Greg Sharenow, ex­ec­u­tive vice-pres­i­dent for Pimco, said on the side­lines of the OPEC meet­ing.

“It is un­likely to spark a mean­ing­ful price rally, but also will not be so dire ei­ther. In many re­spects it is the mid­dle road, which may be the op­ti­mal so­lu­tion,” said Sharenow, who helps man­age a $15 bil­lion com­modi­ties fund at the $1.77 tril­lion U.S. in­vest­ment man­age­ment firm.

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

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.

Rus­sia, Saudi Ara­bia and the United States have been vy­ing for the po­si­tion of top crude pro­ducer in re­cent years. The United States is not part of any out­put­lim­it­ing 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 sanc­tions waivers to some buy­ers of Ira­nian crude, fur­ther raising fears of an oil glut next year.

“Hope­fully OPEC will be keep­ing oil flows as is, not re­stricted. The world does not want to see, or need, higher oil prices!” Trump wrote in a tweet on Wed­nes­day.

Ira­nian Oil Minister Bi­jan Zan­ganeh said yesterday he would sup­port a cut as long as Iran did not need to re­duce its own out­put. Iraqi Oil Minister Thamer Ghad­hban said Iraq as OPEC’s sec­ond­largest pro­ducer would sup­port and join a cut.

Pos­si­bly com­pli­cat­ing any OPEC de­ci­sion is the cri­sis around the killing of jour­nal­ist Ja­mal Khashoggi at the Saudi con­sulate in Is­tan­bul in Oc­to­ber. Trump has backed Saudi Crown Prince Mo­hammed bin Sal­man de­spite calls from many U.S. politi­cians to im­pose stiff sanc­tions on Riyadh.

OPEC Pres­i­dent Mo­ham­mad Sanusi Barkindo, third from right, and En­ergy Minister of the United Arab Emi­rates Suhail al-Mazrouei, fourth from right, opens the 175th OPEC Con­fer­ence of Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) in Vienna yesterday.

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