OPEC agrees to deal to cut oil output, despite Trump pressure

Ann Santiago
December 7, 2018

"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".

That would include production for both OPEC countries as well as non-OPEC countries, like Russian Federation, which have in recent years been co-ordinating their production limits with the cartel, he said.

If Russia contributed around 250,000 barrels per day, the overall cut could exceed 1.3 million barrels per day.

The producer group's de facto leader, Saudi Arabia, has indicated a need for steep reductions in output from January but has come under pressure from U.S. President Donald Trump to push oil prices lower.

Heading in to a meeting of OPEC countries in Vienna on Thursday, Khalid al-Falih told reporters that "all options are on the table" and that Saudi Arabia would be listening to all views.

A pumpjack operates above an oil well at night in the Bakken Formation on the outskirts of Williston, North Dakota, U.S., on Thursday, March 8, 2018.

The Saudi energy minister stressed that he doesn't support any exemptions from further slashing of oil output.

OPEC daily output stood at 32.99 million barrels in October, according to the International Energy Agency.

The Organization of Petroleum Exporting Countries and its allies are desperate to shore up oil prices after a slump of more than $20 a barrel since October.

Yesterday, the US President tweeted: "Hopefully OPEC will be keeping oil flows as is, not restricted". But they're contending with vociferous opposition from the US 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. But just like the USA is pursuing its own interests, one can not expect Saudi to do anything different - even despite the controversy surrounding the killing of journalist Jamal Khashoggi in Istanbul at the Saudi embassy.

"We're still debating the distribution" of any possible cuts, he added. OPEC chose to maintain 100 per cent conformity on the cuts announced in 2016 as compared to 152 per cent observed in May. A delegate from another country said some members believe a smaller reduction would be adequate.

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

"The stakes are high now for OPEC".

Two non-Opec countries are especially important in different ways: Russian Federation and the United States.

In a surprise move on Monday, Qatar - which has been an OPEC member since 1961 - said it would quit the cartel next month in order to focus on gas production.

Top OPEC producer Saudi Arabia has been leading calls for the group to trim output, amid surging supply and fears that an economic slowdown will erode fuel demand. One of the key questions in Thursday's talks is whether to exempt Iran from having to cut production, as its energy industry is already hobbled by US sanctions on its crude exports.

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