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OPEC talks stall as Saudis refuse to exempt Iran from oil cut

Reuters  |  VIENNA 

By El Gamal, Ahmad Ghaddar and Astakhova

(Reuters) - OPEC talks on production cuts reached deadlock on Friday as the group's refused to grant sanctions-hit exemptions from planned reductions, OPEC sources said.

Saudi Khalid al-Falih, asked on Friday whether he was confident the day's meetings would produce a deal, said: "No."

The Organization of the Petroleum Exporting Countries was meeting in for a second day running, before discussions later in the day with non-member producers led by

On Thursday, OPEC tentatively agreed an output cut but could not decide concrete parameters as it was waiting for a commitment from Russia, sources from the group said.

On Friday, four OPEC and non-OPEC sources said Saudi Arabia's arch-rival Iran, which came under fresh U.S. sanctions in November, was also holding up a final deal.

"will insist on an exemption until sanctions are removed," one of the OPEC sources said. Another source said wanted an OPEC communique to specify that was exempt from cuts.

faces pressure from U.S. to help the global economy by refraining from cutting supplies.

An OPEC output reduction also would provide support to Iran by increasing the price of

Possibly further 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

U.S. for Iran met Falih in this week, in an unprecedented development ahead of an OPEC meeting. first denied the Hook-Falih discussion took place but later confirmed it.

"U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the market," said Gary Ross, of and a veteran OPEC watcher.

RUSSIAN DILEMMA

The price of crude has fallen almost a third since October to around $60 a barrel as Saudi Arabia, and the raised output to offset lower exports from Iran, OPEC's third-largest [O/R]

The price decline prompted OPEC and its allies to discuss output cuts, and Falih said on Thursday possible reductions by those involved ranged from 0.5-1.5 million bpd.

"The Iran exemption is the biggest hurdle ... If there is no agreement, the timeline for a deal will be pushed to the first quarter of 2019," Energy Aspects said in a note.

A reduction of 1 million bpd would be acceptable and so far was the main scenario, Falih said, but he added that needed to commit significant volumes.

Russian met with in on Thursday and returned to the Austrian capital on Friday morning.

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

A source said on Friday was ready to contribute a cut of around 200,000 bpd and that Iran, not Russia, now seemed the main hurdle for a deal.

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

On Thursday, figures showed the country had become a net exporter of and refined products for the first time on record, underscoring how the surge in production has altered the supply equation in world markets.

(Additional reporting by 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: Fri, December 07 2018. 17:32 IST
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