Published: Fri, December 07, 2018
Markets | By Erika Turner

Saudi Arabia says 'not confident' OPEC can reach agreement on cuts

Saudi Arabia says 'not confident' OPEC can reach agreement on cuts

"Russia, a major oil producer but not a member of OPEC, will meet with the producer cartel on Friday to discuss production levels, and it is widely expected that a supply cut will be agreed".

S&P Global Platts reports that Nigeria and Libya would be asked to accept a production cut quota if OPEC can reach a new supply accord at the meeting holding in Vienna on Thursday.

He tells reporters the nations are "after a stable market and also a fair price for the producers as well as the consumers".

While the net balance shows the USA is selling more petroleum than buying, American refiners continue to buy millions of barrels each day of overseas crude and fuel.

The energy minister of Saudi Arabia Khalid al-Falih was reported today to have said a cut of 1 million barriers per day would be sufficient for OPEC.

The Trump administration has sent the country's special envoy for Iran Brian Hook to Vienna, where he held talks with the Saudi energy minister one day before OPEC's 175th meeting. When some US sanctions were lifted after President Barack Obama's nuclear deal with Iran, oil production in the country went up by about 1 million barrels a day to about 3.8 million barrels.

Iran is now subject to US sanctions and as such won't participate in any curbs, the country's OPEC governor Hossein Kazempour Ardebili said this week.

OPEC has tentatively agreed an oil output reduction but is reportedly waiting for Russian Federation to declare its commitment before deciding the exact volumes for a cut aimed at propping up crude prices.

In a tweet on Wednesday, the president warned OPEC against restricting oil flows and said the world does not want to see higher oil prices.

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Saudi Arabia, the de facto head of the cartel, finds itself in an especially delicate position in the wake of the murder of journalist Jamal Khashoggi.

Most OPEC members felt the same way, but "some members are going along with U.S. policy", he said. However, Moscow has not yet specified how much it will cut production during the fresh round of supply caps that is now under consideration.

So far, Trump has supported Saudi Arabia's version of the story, which exonerates Crown Prince Mohammed bin Salman of any involvement in the murder, despite United States intelligence agencies allegedly telling Trump the prince was involved.

American oil producers do not co-operate with Opec to manage prices, because that would be illegal under U.S. anti-trust or competition law.

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day.

"The stakes are high now for OPEC".

"Given the economic sanctions being reimposed by the United States, the Islamic republic "(won't) join any agreement for cutting production because of the special situation Iran faces", Zanganeh said. "OPEC and Russian Federation will be very careful about voluntary "blood letting".

Russia's big oil companies are close to the government and the dominant firm in Saudi Arabia - Saudi Aramco - is state-owned. Falih also noted that production from some OPEC producers is falling. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.

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