OPEC Members Expected To Agree Oil Production Cut To Support Prices

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Monitoring Report: The Organisation of the Petroleum Exporting Countries (OPEC) is expected to agree oil production cut at a meeting aimed at supporting oil prices.

Representatives from some of the world’s top oil producers are due to meet on Thursday in Vienna, following a recent decline in the price of the commodity.

Hours before the meeting, US President Donald Trump called on OPEC and its allies to keep oil production high, so that prices remained low for the foreseeable future.

“Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!” said Trump, who has in the past repeatedly accused the cartel of keeping prices artificially high.

But OPEC and its partners, who account for more than half of the world’s oil output, are planning to throttle production, which could lead to rising oil prices.

“Yes, we will have a cut,” Oman’s oil minister Mohammed bin Hamad Al Rumhi said on Wednesday evening.

His comments were echoed by his Nigerian counterpart.

By how much oil production will be reduced is unclear, but de facto leader of OPEC Saudi Arabia, the world’s largest oil producing country, reportedly wants to curb output by at least 1.3 million barrels per day, or 1.3 percent of global production.

Saudi Arabia is hoping Russia, one of OPEC’s most important allies, cuts down its production by about 250,000 barrels per day, but Russia wants to limit its cut to half that amount.

OPEC delegates on Thursday said the group would make a planned cut in oil output conditional on the contribution from non-OPEC producer Russia.

Five OPEC delegates told Reuters news agency the group was waiting for news from Russia, as Energy Minister Alexander Novak had flown back from Vienna on Wednesday for a possible meeting with President Vladimir Putin.

Iran hopes to be exempted from the cuts to keep its economy afloat, as the country faces harsh economic sanctions imposed by the US.

“We must be excluded from any decision to cut production as long as illegal US sanctions are not lifted,” Iran’s Oil Minister Bijan Namdar Zanganeh said on Wednesday evening as he arrived in Vienna.

The US, not a member of OPEC but a significant oil producer itself, has repeatedly called for oil prices to stay low, with Trump using Twitter several times to make the point.

In October, the oil price reached a four-year high of $86, but since then the price has dropped again to about $60 per barrel.

The Vienna meeting also comes only days after Qatar announced it would be the first country from the Middle East to withdraw from OPEC, saying it wanted to focus more on gas production.

Qatar, which will leave on January 1, played only a small role in the organisation, providing just under two percent of OPEC’s total output.

The country wants to focus more on that natural resource, of which it’s currently already the world’s biggest exporter with about 30 percent of global production.

 

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