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OPEC agrees tentative oil cut, waits for Russia to commit

Reuters  |  VIENNA 

By El Gamal and Ahmad Ghaddar

(Reuters) - OPEC tentatively agreed an on Thursday but was waiting to hear from non-OPEC heavyweight before deciding the exact volumes for a production reduction aimed at propping up crude prices, two sources from the group said.

Russian flew home from earlier for talks with in Novak returns to the Austrian capital on Friday for discussions among Saudi-led OPEC and the group's allies.

The price of crude has fallen almost a third since October but U.S. has demanded the Organization of the Petroleum Exporting Countries make even cheaper by refraining from output cuts.

"We hope to conclude something by the end of the day tomorrow ... We have to get the non-OPEC countries on board," Saudi told reporters before the OPEC meeting started.

"If everybody is not willing to join and contribute equally, we will wait until they are."

GRAPHIC: OPEC's battle to coax to cut output as the U.S. ramps


Asked whether OPEC could fail to reach a deal, Falih said all options were on the table. Possible output cuts by OPEC and its allies ranged from 0.5-1.5 million bpd, and 1 million bpd was acceptable, he said.

OPEC's closed-door meeting began around 1100 GMT and was still ongoing after 2-1/2 hours.

Brent futures fell as much as 5 percent to below $59 per barrel on fears that there could be no deal but later recovered somewhat, trading down 2 percent by 1325 GMT.

"One million bpd may disappoint many. But should the cut be from a September or October baseline, rather than November, the net impact would be sufficient to limit storage builds," Greg Sharenow, executive vice-for Pimco, said on the sidelines of the OPEC meeting.

"It is unlikely to spark a meaningful price rally, but also will not be so dire either. In many respects it is the middle road, which may be the optimal solution," said Sharenow, who helps manage a $15 billion commodities fund at the $1.77 trillion U.S. investment management firm.

GRAPHIC: OPEC crude production in November - Survey

OPEC delegates have said the group and its allies could cut by 1 million bpd if contributed 150,000 bpd of that reduction. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.

Novak said on Thursday that Russia would find it harder to cut in winter than other producers because of the cold weather.

have crashed as Saudi Arabia, Russia and the raised output since June after Trump called for higher production to offset lower exports from Iran, OPEC's third-largest

in OPEC between Nov 2018 and Oct 2016

Russia, and the have been vying for the position of top crude in recent years. The is not part of any output-limiting initiative due to its anti-trust legislation and

GRAPHIC: Who might agree to an OPEC crude supply deal?


Iranian exports have plummeted after the imposed fresh sanctions on in November. But gave sanctions waivers to some buyers of Iranian crude, further raising fears of an

"Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!" Trump wrote in a tweet on Wednesday.

Iranian said on Thursday he would support a cut as long as did not need to reduce its own output. Iraqi said as OPEC's second-largest would support and join a cut.

Possibly complicating any OPEC decision is the crisis around the killing of at the in October. Trump has backed Saudi despite calls from many U.S. politicians to impose stiff sanctions on

(Additional reporting by Shadia Nasralla, and Alex Lawler; Writing by Dmitry Zhdannikov; Editing by Dale Hudson; Graphics by Amanda Cooper)

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

First Published: Thu, December 06 2018. 19:27 IST