Opec+ said to agree on 1.2 Mmbpd production cut

Opec+ said to agree on 1.2 Mmbpd production cut

Opec+ said to agree on 1.2 Mmbpd production cut

While President Trump repeatedly urged OPEC to keep things as they were, his words went unheeded on Friday. "Russia is not ready for a substantial cut".

Another sticking point in the talks was Iran's contribution, a delegate said.

"With total USA gas demand already lower in recent days, the short-term weather outlook calls for further weakness ahead, with most of the country projected to see above average temperatures", he said.

The Energy Information Administration reported early Wednesday that US crude supplies fell by 1.2 million barrels for the week ended December 7.

OPEC, which pumps one-third of global output, wants to curb a 30 percent fall in prices in the past two months. Prices extended declines on Friday.

"We are becoming the dominant energy power in the world", said Michael Lynch, president of Strategic Energy & Economic Research. OPEC members include Algeria, Angola, Congo, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.

The Russian Energy Minister, Alexander Novak, was quoted by Reuters as saying the decision to cut output was hard one for his country in view of the winter and the cold weather at Russian oil fields.

Arriving at the resolution did not come cheap, as negotiations among the non-OPEC members, driven by Russian Federation and USA, dragged, based on the national interest of each country. 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. "The market won't care if tomorrow they manage a sizable cut with proper metrics, but that's still a big if".

The cut will last for six months from January, Ghadhban said, and take October as the baseline. That was in line with the Saudi minister's preference for a moderate reduction that wouldn't "shock the market".

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But some observers say an economic slowdown could reduce demand for crude oil next year.

"OPEC is an independent organisation and is not part of the US Department of Energy to take orders from Washington", Zanganeh told Iranian oil ministry news website SHANA, as reported by Reuters.

The outcome of the marathon talks in Vienna shows how OPEC was able to pull off a juggling act.

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

Saudi Energy Minister Khalid al-Falih said he was not confident a deal could be reached.

Producers will use October production levels as a baseline for cuts and the agreement will be reviewed in April.

The oil price improvements came as a pair of junior Calgary oil companies announced they would cut payouts to shareholders and reduce production because of the current quarter's low oil prices to date. On Wednesday, he tweeted: "Hopefully OPEC will be keeping oil flows as is, not restricted".

Another source said Tehran wanted an OPEC communique to specify that Iran was exempt from cuts.

OPEC Kingpin Saudi Arabia, meanwhile, has to bear in mind pressure from the United States after President Donald Trump demanded in a tweet on Wednesday that the cartel boost output so as to lower prices and help the economy.

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