Published: Thu, December 06, 2018
Markets | By Otis Pena

Saudi Arabia works on convincing Russian Federation to join oil cuts

Saudi Arabia works on convincing Russian Federation to join oil cuts

Khalid al-Falih, Saudi Arabia's energy minister, says some members of the Organisation of Petroleum Exporting Countries (OPEC) have been complaining that Libya and Nigeria are overproducing.

President Trump is pressuring OPEC to increase oil production as members of the organization are set to meet in Vienna on Thursday.

Saudi Arabia sought to persuade Russian Federation on Wednesday to cut oil production substantially with OPEC next year in an attempt to arrest a decline in the price of crude and prevent another global glut.

"We hope to conclude something by the end of the day tomorrow".

The Saudi minister pointedly said Washington should back off.

The meetings are expected to be focused on a deal to reduce output, but Iran's OPEC governor Hossein Kazempour Ardabili believes an agreement is unlikely to be reached.

The move would mean reducing production by more than 1 million bpd.

Prices have already plunged more than 30% over the past two months and a barrel of Brent crude, the European benchmark, now stands at around $60.

"We think OPEC will spend some time to choose the words being used".

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President Donald Trump in the Oval Office. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years.

Iran hopes to be exempted from the cuts to keep its economy afloat, as the country faces harsh economic sanctions imposed by the US.

In a sign of easing tensions between the world's two biggest economies, Chinese oil trader Unipec plans to resume USA crude shipments to China by March after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, people with knowledge of the matter said.

President Trump has issued a long string of Tweets directed at OPEC this year, lashing out at OPEC in the past for restricting production, which raises prices as supply tightens.

Oil prices fell 1 percent on Wednesday, weighed down by swelling United States inventories and a plunge in global stock markets as China's government warned of increasing economic headwinds.

"We don't need permission from anyone to cut", he said.

Possibly complicating any Opec decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October.

So far, Trump has supported Saudi Arabia's version of the story, which exonerates Crown Prince Mohammed bin Salman of any involvement in the murder, despite U.S. intelligence agencies allegedly telling Trump the prince was involved.

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