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

The long rally in oil prices lasted until October.

The 15-member organization and non-OPEC partners, including Russian Federation, will reportedly negotiate steep output reductions which could start in January.

"I think a million [barrels a day] will be adequate personally", Saudi Oil Minister Khalid Al-Falih said upon arriving to the meeting in Vienna. We have to get the non-OPEC countries on board.

Saudi Arabia sought to persuade Russian Federation on Wednesday to cut oil production substantially with OPEC next year in an attempt to arrest a decline in the price of crude and prevent another global glut.

The Middle East-dominated Opec plans to cut output despite pressure from US President Donald Trump to support the global economy by keeping oil prices low. "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.

Al-Falih said a decision would take all day Friday. He also said that a 1 million bpd production cut was acceptable.

The oil price has been hammered by concerns that supply will outstrip demand next year, weakness in global markets and technical trading that has extended the selling.

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

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While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump's decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi.

Oil ministers from 20 or so countries are in Vienna for two days of meetings - first, the 15 members of OPEC, then a wider group including countries outside the cartel.

However, analysts at ING told AFP news agency that the USA administration could possibly use the murder of journalist Jamal Khashoggi as leverage. Oil Minister Bijan Namdar Zanganeh said that his country "doesn't join any agreement for cutting production because of the special situation Iran faces", a reference to U.S. sanctions against the country's oil industry.

"OPEC is an independent organization, not a part of the US Department of Energy to take orders from Washington", said Zangeneh on Wednesday. The power of OPEC has been diminished, undercutting one of the major geopolitical forces of the last half century.

The United States became a net oil exporter last week for the first time in 75 years, and even if it is likely to be for just one week, the achievement highlights the increasing global influence of the soaring US crude oil production. But they didn't discuss how big any cuts should be, he said.

Although Russia, the largest producer in the wider group known as OPEC+, agreed to a cut in principle, the eventual size of their contribution remains undefined and will be key to putting together the final deal.

Saudi Arabia, OPEC's de facto leader, has made clear that it won't shoulder the burden of trimming production alone.

  • Darren Santiago