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

Roman Schwartz
December 6, 2018

Investors did not seem convinced, however, and were pushing the price of oil down sharply again on Thursday, with some experts saying there is concern about the size of the cut.

Members of the Organization of the Petroleum Exporting Countries (OPEC), as well as the cartel's allies, are meeting at OPEC's headquarters in Vienna on Thursday.

Mr al-Falih, said today: "We hope to conclude something by the end of the day tomorrow".

That has put OPEC kingpin Saudi Arabia in a delicate position - Riyadh is keen not to incur Trump's wrath as relations between the two countries become increasingly complicated in the wake of the murder of opposition journalist Jamal Khashoggi.

President Donald Trump urged OPEC nations not to cut oil production ahead of a meeting of the cartel to consider a reduction in output. The United States is not part of any output-limiting initiative due to its strict anti-trust legislation and fragmented oil industry.

Donald Trump has often complained about OPEC this year as higher crude oil prices have raised fuel cost.

A day of talks in the Austrian capital on Wednesday concluded with a panel led by Saudi Arabia and Russian Federation - the group's most powerful members - recommending an output reduction lasting six months, Oman's Oil Minister Mohammed Al Rumhy told reporters.

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The move would mean reducing production by more than 1 million bpd. Iraq is not the only one that can't really afford the cuts: Iran has stated it will not discuss its production quota while under sanctions and Russian Federation has made it clear it was fine with prices where they are.

"While we believe that President Trump will be reluctant to escalate the situation, the Saudis are likely to choose the wording of any statement with regards to cuts very carefully", ING told AFP.

When asked if the Saudis had permission from Trump to cut production, Al-Falih replied: "I don't need permission from any foreign governments".

International Brent crude oil futures LCOc1 were at 61.04 dollars per barrel at 0531 GMT, down 52 cents, or 0.8 per cent from their last close.

OPEC is also riven by internal conflict, especially between regional rivals Saudi Arabia and Iran. Those differences persisted after Wednesday's meeting, OPEC delegates said.

Oil prices have crashed by nearly a third since October to around $60 per barrel as Saudi Arabia, Russia and the UAE have raised output since June after Trump called for higher production to compensate for lower Iranian exports. An oil price around $60 suits the needs of producers and consumers and it should remain at that level in January, he said.

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