A meeting of Saudi Arabia, Russia and other members of the OPEC group recommended an oil production cut, defying a Twitter plea from President Donald Trump to keep the taps open, but didn’t agree on how big any reduction should be.
The group secured Russia’s participation in six months of output curbs starting in January, Oman’s Oil Minister Mohammed Al Rumhy told reporters in Vienna as he left the meeting on Wednesday. Although the committee didn’t discuss specific cuts, there’s still time to agree on numbers and the final deal could remove about 1 million barrels a day from the market, he said.
Ministers from the core OPEC group, which doesn’t include Russia, will now meet today to seek a consensus on exactly who will cut and by how much. While Saudi Arabia, the group’s biggest producer, will shoulder most of the burden, the kingdom wants commitments from other countries before committing to a final deal.
Saudi Arabia, Russia and the other countries that make up the so-called OPEC+ coalition are desperate to shore up oil prices after a slump of more than $20 a barrel since October. But they’re contending with vociferous opposition from the U.S. president, who’s taken to using his Twitter account to berate the group’s policies and sees low oil prices as key to sustaining America’s economic growth.
While ministers met in OPEC’s Vienna headquarters, Trump tweeted that the “world does not want to see, or need, higher oil prices!”
Oil pared gains after the meeting finished to trade at $62.25 on Wednesday afternoon
“OPEC’s production cut is not always a reason for higher prices,” .
Emmanuel Akinbobola a Lagos based energy analyst said OPEC meetings are now all about politics rather than the interests of the cartel’s members.
“The kingdom is getting even closer to Moscow because it needs to strike new agreements.”
New York based professional consulting services Eurasia Group stated in a report that it expects a settlement by OPEC and Russia to chop a mixed 1.5 million barrels a day from the market although it expects discussions not to be straightforward however it expects Saudi Arabia will to persuade OPEC and non-OPEC group to lower output.
“A ramp-up of Saudi production to 11.2 million barrels per day might be an instrument utilized by Riyadh to press for a deal in Vienna,” stated Eurasia Group.
Iran is currently subject to U.S. sanctions and as such won’t participate in any curbs, the country’s OPEC governor Hossein Kazempour Ardebili said this week.
U.S. special representative for Iran Brian Hook met with Saudi Energy Minister Khalid Al-Falih in Vienna on Wednesday, according to a person familiar with the matter.
The last time the OPEC+ group agreed to curtail output, in late 2016, it settled on a combined 1.8 million-barrel-a-day reduction. In preparatory meetings ahead of this week’s summit, delegates have said a cut of as much as 1.3 million barrels a day next year is needed as demand growth slows and U.S. shale production surges.
In conversations earlier this week, OPEC delegates said that Russia and Saudi Arabia still differ on how to share the cuts. Saudi Arabia argued that Russian proposals implying a cut by Moscow of as much as 150,000 barrels a day would leave the kingdom shouldering too much of the burden, and insisted there should be a more equal partnership, said people familiar with the talks.
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