OPEC Works on Deal to Cut Oil Output

The Organisation of Petroleum Exporting Countries (OPEC) and its allies are working toward a deal this week to reduce oil output by no less than 1.3 million barrels per day.

It added that Russia’s resistance to a major cut was so far the main stumbling block.

OPEC would meet on Thursday in Vienna, followed by talks with allies such as Russia on Friday, amid a drop in crude prices caused by global economic weakness and fears of an oil glut due largely to a rise in U.S. production.

The sources, three from OPEC and one from a non-OPEC producer, said the meetings were taking place in a difficult environment and that Russia’s position would be key in reaching a deal.

“Russia is playing tough,” one of the OPEC sources said.

Another OPEC source said: “the Saudis are working hard on the cut. But if Russia says no cut, then we (OPEC) won’t cut.”

Russian sources have indicated Moscow could contribute some 140,000 bpd to a reduction, but Middle East-dominated OPEC insisted Russia cut by 250,000-300,000 bpd.

Two sources said talks were focusing on a pro-rata cut of 3-3.5 per cent from October output levels, with no exemptions for any member.

Sources also said OPEC could delay a decision to cut if the main criteria such as Russia’s involvement were not met, even though doing so would mean a further fall in prices.

“OPEC can always meet again in February, for example, and decide on a cut then. Those who were not able or willing to cooperate will want to cut then,” one source said.

It would be recalled that Saudi Arabia had previously insisted on a need to reduce production.

OPEC is an intergovernmental organisation of 15 nations, founded in 1960 in Baghdad by the first five members, and headquartered since 1965 in Vienna, Austria.

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