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OPEC oil cuts at risk as Russia yet to commit

Reuters  |  VIENNA 

By El Gamal and Ahmad Ghaddar

(Reuters) - OPEC and its allies are working towards cutting output by up to 1.5 million barrels per day but could fail to reach a deal if no compromise is found with non-OPEC Russia, the Saudi said on Thursday.

As the Organization of the Petroleum Exporting Countries gathered in Vienna, it awaited from Russian Alexander Novak, who flew home from the Austrian capital earlier for possible talks with

Novak returns to on Friday for discussions among Saudi-led OPEC and the group's allies.

OPEC hopes to prop up the price of crude, which has fallen by almost a third since October, but U.S. has demanded it make 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," the Saudi minister, Khalid al-Falih, told reporters.

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

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 began its closed-door meeting around 1100 GMT.

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 1230 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.

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

Novak said on Thursday that 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

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


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 Oil 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)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, December 06 2018. 18:26 IST