Economy

OPEC members expected to agree oil production cut

OPEC members expected to agree oil production cut”

Saudi Arabia has indicated it wants the Organization of the Petroleum Exporting Countries and its allies to cut output by at least 1.3 million barrels per day, or 1.3 percent of global production. Iraqi Oil Minister Thamer Ghadhban said Iraq as OPEC's second-largest producer would support and join a cut.

The current 1.8 million barrels per day production cut will expire in December. "It is still under discussion", one delegate said. The oil market reacted negatively, dropping 52 cents to $61.56 a barrel in London.

Oil prices have crashed as Saudi Arabia, Russia and the UAE have raised output since June after Trump called for higher production to compensate for lower exports from Iran, OPEC's third-largest producer. "The World does not want to see, or need, higher oil prices!" said Trump, who has in the past repeatedly accused the cartel of keeping prices artificially high.

Oil prices fell along with weak stock markets on Thursday, but trading was tepid ahead of a meeting by the Organisation of the Petroleum Exporting Countries (OPEC). Trump wrote in a tweet on Wednesday. While Saudi Arabia, the group's biggest producer, will shoulder most of the burden, the kingdom wants commitments from other countries before completing a final deal. "I am optimistic. There will be a deal, but it is unclear how much Opec and how much non-Opec will contribute". "How OPEC communicates this to the market may be just as important as what gets done".

The deal is monitored by the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC), which is dominated by Saudi Arabia and Russian Federation.

The slide in USA oil followed a tumble in global stock markets on Tuesday and Wednesday, with investors anxious about the threat of a widespread economic slowdown.

"I think the likelihood is that they will cut crude production rate, maybe not as dramatically as some people would like, to try and meet a balance between what the US would like and their own personal interests". If Russia does agree a cut, it would take three to four months to fully implement it, he said. That's despite United States pressure on OPEC to reduce the cost of crude. Libya and Nigeria, which were exempt from making cuts in the 2016 deal that created the OPEC+ group, have accepted that they will have to participate this time, said Al Rumhy.

Russia's oil giant Lukoil said it's ready to cut production if the upcoming meeting results in a deal to prop up prices, the company's CEO Vagit Alekperov told reporters, according to TASS news agency.

Saudi Arabia has been calling steep cuts in oil output and was expected to raise those demands during the meeting, but pressure from the USA may convince Saudi leaders to take a softer tone.



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