Opec heads toward a deal on daily output cuts

Russia will announce plans today as Opec mulls 1m bpd cut

Brent fell 5 per cent earlier during the day after Opec signalled it may agree to a smaller cut than had been expected. Saudi Arabia’s Energy Minister Khalid Al Falih said before the meeting that Opec and its allies would be happy with a cut of just 1 million barrels per day (bpd).

“We’re looking for a sufficient cut to balance the market, equally distributed between countries,” Al Falih had said ahead of an Opec meeting in the Austrian capital, Bloomberg reported. “A cut of about 1 million bpd from the whole group should be adequate,” and that “certainly we don’t want to shock the market.”

2019 challenges

■ higher supply growth than expected global requirements and there are signs of a potential slowdown in demand,” he said.

On the other hand, US President Donald Trump continues to put pressure on Opec to keep pumping more for lower prices. “Hopefully, Opec will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices,” he tweeted.

Analysts say there is still a long way to go and the discussions between Opec and its allies are still in the initial stages.

“President Trump’s ongoing oil market intervention will continue to test Opec and its allies’ tolerance,” said Ehsan Khoman, head of Mena Research and Strategy at MUFG Bank, Ltd. “We view that the group will focus its endeavours on its ‘Opec+ First’ policy, and thus prioritise curbing the current oversupply, above entertaining calls from Trump to maintain current production levels.”