OPEC tries again to agree on production cuts | Eurasia Diary - ednews.net

24 May, Friday

OPEC tries again to agree on production cuts

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OPEC's deliberations over how much oil to remove from world markets stretched into a second day on Friday.

Members of the cartel emerged from negotiations on Thursday without a consensus on production cuts, leading to the cancellation of a press conference and pessimistic comments from Saudi officials.

Discussions on Friday will include Russia, the world's second biggest oil producer and a key partner in OPEC efforts to slash production and boost prices.

OPEC's failure to reach an agreement quickly on Thursday unsettled investors and pushed crude prices sharply lower. But analysts still expect a deal to be struck before the meetings conclude in Vienna.

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

OPEC is seeking to stabilize oil markets after US crude prices plunged 22% in November, marking the the worst month since the global financial crisis in 2008. US crude was trading little changed on Friday at around $51.40 a barrel, 33% below a four-year high of $76 hit in early October.

The question is how much production OPEC and Russia can agree to cut, and how the reductions will be shared among the group.

Saudi Arabia's energy minister Khalid Al-Falih told reporters on Thursday that a production cut of about 1.3 million barrels a day might be "excessive" given a recent decision by Canada to scale back its output.

But analysts have said that a cut of around 1 million barrels per day would not be enough to balance the market in the first half of 2019.

Global markets are awash with oil. The United States is pumping at record levels and recently surpassed Russia and Saudi Arabia for the first time since 1973 as the world's largest producer.

Meanwhile, Iran is still selling crude despite sanctions. The United States surprised OPEC and other producers by granting waivers to eight countries to continue buying Iranian oil after it reimposed sanctions in November.

The International Energy Agency warned last month that supply is expected to exceed demand through 2019.

In its November market report, OPEC said demand for its oil next year would be about 1.1 million barrels a day less than in 2018, and 1.4 million below current OPEC production.



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