OPEC de­lays oil out­put plan amid Rus­sia talks

The Herald Sun - - Business - BY KIYOKO MET­ZLER AND CARLO PIOVANO As­so­ci­ated Press

OPEC coun­tries hop­ing to sup­port the price of oil put off their de­ci­sion Thurs­day on how much to re­duce oil pro­duc­tion un­til they ne­go­ti­ate with ally Rus­sia on Fri­day on how much it will con­trib­ute to the cut.

Some saw it as a sign that the group of oil-pro­duc­ing na­tions may not have the po­lit­i­cal unity to rein in sup­ply and is suf­fer­ing un­der po­lit­i­cal pres­sure from U.S. Pres­i­dent Don­ald Trump to not push prices up again. Oth­ers in­ter­preted it as a tac­tic to get Rus­sia to agree to big cuts as well.

The price of oil has fallen about 25 per­cent be­cause ma­jor pro­duc­ers – in­clud­ing the U.S. – are pump­ing oil at high rates. It fell fur­ther on Thurs­day after OPEC’s lack of ac­tion and amid broader con­cerns about global eco­nomic growth.

Saudi Ara­bia, the heavy­weight within OPEC, said Thurs­day it was in fa­vor of a cut of about a mil­lion bar­rels a day.

But upon leav­ing the meet­ing, Saudi oil min­is­ter Khalid Al-Falih said “we’re still de­lib­er­at­ing.” He said the OPEC coun­tries were still dis­cussing the distri­bu­tion of the cuts be­tween them.

Iran, Saudi’s re­gional ri­val and fel­low OPEC mem­ber, has re­sisted any no­tion of cut­ting its out­put as its crude ex­ports are be­ing pinched al­ready by U.S. sanc­tions. It has wanted an ex­emp­tion.

The OPEC coun­tries will now dis­cuss the meet­ing with Rus­sia, which is not part of OPEC but has been co­or­di­nat­ing its out­put lev­els to sup­port the mar­ket.

Al-Falih said a de­ci­sion would take all day Fri­day.

“I’m not con­fi­dent,” he added.

Some ex­perts saw that as a tac­ti­cal move by OPEC coun­tries to not an­nounce a pro­duc­tion level as they pre­pare to ask Rus­sia and sev­eral other smaller non-OPEC coun­tries to also cut their out­put.

“If they would, then (Rus­sia and oth­ers) could ad­just their ne­go­ti­a­tion strat­egy,” said Jan Edel­mann, an­a­lyst at HSH Nord­bank.

What­ever the logic, the lack of clar­ity put an­other dent in the price of oil. The in­ter­na­tional bench­mark, Brent, was down $2.20 at $59.36 a bar­rel on a day when stock mar­kets also fell sharply around the world.

The fall in the price of oil will be a help to many con­sumers as well as en­ergy-hun­gry busi­nesses, par­tic­u­larly when global growth is slow­ing. And Trump has been putting pres­sure pub­licly on OPEC to not cut pro­duc­tion. He tweet­edWed­nes­day that “Hope­fully OPEC will be keep­ing oil flows as is, not re­stricted. The World does not want to see, or need, higher oil prices!”

While Saudi Ara­bia has in­di­cated it is will­ing to cut pro­duc­tion, its de­ci­sion may be com­pli­cated by Trump’s de­ci­sion to not sanc­tion the coun­try over the killing of dis­si­dent jour­nal­ist Ja­mal Khashoggi.

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