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OPEC and partners face steep challenge to reach oil cut deal

AFP  |  Vienna 

will meet with 10 partner countries, including Russia, on Friday to try to thrash out an agreement on production cuts, a day after the group's members failed to reach a deal.

The cartel had been expected to sign off on cuts to stem a plunge in prices at a meeting on Thursday, but it broke up without an accord.

"No, I am not confident" about the chances of a deal, Saudi told reporters after a long day of negotiations at in

However, and its non-cartel members -- who account for around half of global output -- agree on one thing: a glut on the market has led to falling by more than 30 per cent in the space of two months.

However, the major players among the all have their own reasons to look to others to act.

For Russia, which leads the non-member countries in the so-called OPEC+ alliance, "it's much more difficult to cut than for other countries, because of our climatic conditions," Russian Minister said on Thursday in Saint Petersburg.

Saudi Arabia, meanwhile, has to bear in mind pressure from the US, after demanded in a tweet on Wednesday that not boost prices.

In addition, the kingdom's diplomatic position has been weakened by the furore over the killing of

Though al-Falih insisted that "we don't need permission from anyone to cut" production, the figure of a million barrels put forward by was lower than the reduction expected by the markets.

Iran, Saudi Arabia's geopolitical rival and OPEC's third-largest producer, suggested it was in favour of deeper cuts -- while asking to be exempted from them because of the effects of US sanctions targeting its

The thorny question of exemptions, which will also be sought by and according to the agency, could be crucial for Friday's talks.

The amount and the timetable of any cuts imposed by will also be a key sticking point.

Iraqi said he was still "hopeful" an agreement could be reached during talks on Friday.

However, markets displayed doubts with fresh falls in sparking a sell-off of stocks by investors.

The price of a barrel of Brent, the European benchmark, sank below the symbolic USD 60 mark because the reduction of around one million barrels floated by was below what markets had been expecting.

Analysts say that the details of any agreement will be key in determining what happens next to prices.

"If it's one million (barrels) excluding Iran, then it's in fact 1.2, 1.3, which should be supportive of price," Abhishek Deshpande, an at JP Morgan, told AFP.

This would be because the markets would price in the drop in Iran's production expected due to sanctions.

"But if (the agreement) is including Iran, that's not enough," Deshpande added.

In June, OPEC and its partners agreed to allow for a boost in production by and to compensate for the expected losses in production from after the US dramatically withdrew from the nuclear deal in May and vowed to re-impose sanctions.

However, the US then granted temporary waivers to eight allies to allow them to carry on importing Iranian oil, contributing to a plunge in which wiped out the gains seen since early 2017.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, December 07 2018. 09:50 IST