OPEC in Final Push on Oil-Cut Plan

OPEC has pledged to bring production down to around 32.5 mbpd.OPEC has pledged to bring production down to around 32.5 mbpd.

OPEC nations embarked on a final diplomatic effort to secure a deal on oil cuts, with Qatar, Algeria and Venezuela leading the push to overcome the divide between the group’s biggest producers, according to a delegate familiar with the talks.

The behind-the-scenes diplomacy comes after bilateral meetings over the weekend failed to resolve the rifts, leaving just two weeks to finalize an agreement before the Nov. 30 ministerial meeting in Vienna, according to the delegate, who asked not to be identified because the discussions are private, Bloomberg reported.

Saudi Arabia, Iraq and Iran are still at odds over how to share output cuts, the person said. The Organization of Petroleum Exporting Countries has yet to find a path to finalize the preliminary cuts deal reached in Algiers on Sept. 28, which ended a two-year policy of pumping without limits.

After an initial rally to nearly $54 a barrel, Brent crude has dropped to $45 as doubts spread about the implementation of the agreement. Members’ total output is still growing as Libya and Nigeria recover from violence that halted production. Saudi Arabia, the group’s de-facto leader, says it is ready to cut production, but in practice, the kingdom thinks Iraq needs to cut output and Iran has to freeze production around current levels, the person said.

Neither country has so far agreed to do that. As initially outlined in Algiers, Libya and Nigeria would be exempt from supply curbs. Iran is considering a proposal to freeze its oil production near the level the country says it pumps -- nearly 4 million barrels a day -- rather than OPEC’s estimate of about 3.7 million, the delegate said.  Iraq is mulling a cut, but only from the Oil Ministry’s own level of about 4.8 million barrels a day, not the 4.6 million barrels a day OPEC says it pumps, the person said.

OPEC pledged in Algiers to bring its production down to a range of 32.5 million to 33 million barrels a day, which compares with output of 33.6 million last month. The group is also seeking cooperation from Russia and other producers outside the group, although so far none have committed to curbing output.


Add new comment

Read our comment policy before posting your viewpoints