OPEC members expected to agree oil production cut

OPEC members expected to agree oil production cut

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 USA sanctions.

The US is not in a position to tell OPEC or Saudi Arabia what to do, Saudi Energy Minister Khalid al-Falih told journalists when asked about Donald Trump's reaction to curbing production of crude by the kingdom or the oil cartel.

The Organisation of the Petroleum Exporting Countries (OPEC) is meeting at its headquarters in Vienna, Austria, on Thursday to decide its production policy.

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

The Saudi minister said that it was important that all non-OPEC producers participate in any agreement to reduce production and that all options were on the table to reach an agreement.

US oil prices were little changed after the news.

In the Middle East, Saudi Arabia produced a record 11.3 million barrels per day (bpd) in November, adding to the swelling glut.

"We continue to re-tool our export infrastructure along the Gulf Coast to expand capacity, and you continue to see strong demand globally for crude oil". However, Moscow has not yet specified how much it will cut production during the fresh round of supply caps that is now under consideration. In preparatory meetings ahead of this week's summit, delegates had said a cut of as much as 1.3 million barrels a day next year is needed as demand growth slows and USA shale production surges.

One issue that might complicate relations between the USA and OPEC is the murder of Saudi Arabian journalist Jamal Khashoggi by people linked to the government in Riyadh. The cartel and its allies are meeting in Vienna this week, trying to make a tough choice to cut output and support prices, risking the loss of more market share to the U.S.

Possible output cuts by OPEC and its allies ranged from 0.5-1.5 million bpd, and 1 million bpd was acceptable, the Saudi energy minister said Thursday.

Unless there is a bullish clarification from the Saudi oil minister later today, prices are likely to remain under pressure.

Ann-Louise Hittle, vice president, macro oils, at consultancy Wood Mackenzie said: "We expect the group to agree to a production cut lasting until at least the first half of 2019".

"They should know that OPEC is not part of their Secretary of Energy", said its minister Bijan Namdar Zanganeh. "OPEC and Russian Federation will be very careful about voluntary "blood letting".

According to Reuters, five unnamed delegates said ahead of the meeting that the group's preferred level of supply cuts would effectively be conditional on Moscow's contribution.

The United States became a net oil exporter last week for the first time in 75 years, and even if it is likely to be for just one week, the achievement highlights the increasing global influence of the soaring USA crude oil production.

OPEC members will also have to contend with Iran.

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