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OPEC expected to cut oil production to support price

AP  |  Vienna 

countries were meeting Thursday to find a way to support the falling price of oil, with analysts predicting the cartel and some key allies, like Russia, would agree to cut production by at least 1 million barrels per day.

Crude prices have been falling since October because countries like the US and are producing at high rates and due to fears that weaker economic growth would dampen demand.

The price of both benchmark US crude and the standard for internationally traded fell 22 per cent in November.

The minister of Saudi Arabia, the heavyweight within OPEC, said Thursday that the country was in favour of a cut of 1 million barrels a day.

"I think a million will be adequate personally," said upon arriving to the meeting in

He clarified that that would cover production for both countries as well as non-countries, like Russia, which have in recent years been coordinating their production limits with the cartel.

His Iraqi counterpart, Thamir Ghadhban, said: "I am optimistic that the agreement will stabilise the market, will stop the slide in the price (of oil)."

Investors did not seem convinced, however, and were pushing the down sharply again on Thursday, partly due to broader concerns that a trade war between the US and could escalate and hurt global growth.

The international benchmark for crude, Brent, was down USD 2.91 at USD 58.65 a barrel.

The fall in the will be a help to many consumers as well as energy-hungry businesses, and US has been putting pressure publicly on OPEC to not cut production.

He tweeted Wednesday that "Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!"

Experts say this week's meeting of the will influence the over the coming months.

How strongly it does so could depend on Russia's contribution, which will be determined in a meeting on Friday.

Analysts at estimate that if is willing to step up its production cuts, OPEC and non-OPEC countries could trim production by a combined 1.3-1.4 million barrels a day.

This "would be enough to rebalance the oil market next year," they wrote in a note to investors.

While 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

US Senators say, after a briefing with intelligence services, that they are convinced that Saudi's de-facto ruler, Mohammed bin Salman, was involved in Khashoggi's death.

Some experts say that gives the US some leverage over the Saudis, though Al-Falih denied that on Thursday.

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

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

First Published: Thu, December 06 2018. 17:45 IST