OPEC agrees to oil cut but is waiting for Russian commitment

OPEC agreed on Thursday to reduce oil output, but however, was waiting for agreement and commitment from the largest oil producer outside the Organization, Russia. The exact figures must be decided, in an attempt to reduce production in order to raise crude prices.

Crude prices have fallen since the beginning of last October, as US President Donald Trump called on the Organization of the Petroleum Exporting Countries (OPEC) to cut world oil prices even further by stopping its decisions to cut production. Saudi Oil Minister Khalid al-Falih said they hoped to find solutions during the day and were waiting for commitments from some non-OPEC countries. ” If everybody is not willing to join and contribute equally, we will wait until they are”. Al-Falih added that all options are possible and OPEC has offered to reduce production between 0.5 and 1.5 million barrels per day.

Today, OPEC held its annual and most important gathering in the Austrian capital of Vienna, without any concrete decisions or figures, after several hours of closed meetings. A number of Member States such as Iran, Libya and Venezuela wish to obtain exemptions from the expected reductions.

Brent oil futures LCOc1 fell 5% to trade below $59 a barrel on speculation that a deal could not be reached, but was able to recover later, dropping only 3.5% in recent trading sessions. Experts believe that OPEC and its allies may cut production by 1 million barrels per day if Russia contributed by about 150,000 barrels per day. If Russia contributes about 250,000 barrels per day, the overall reduction could exceed 1.3 million barrels a day. But Russian Energy Minister Alexander Novak said Russia would find it harder to cut oil production in the winter season than other producers because of the cold weather.

Oil prices plunged sharply after Saudi Arabia, Russia and the United Arab Emirates raised production since June, after US President Trump called for increased production to offset the drop in exports from Iran, OPEC’s third largest producer. Russia, Saudi Arabia and the United States compete for the title of the largest crude oil producer.

Iranian exports fell after the United States imposed new sanctions on Tehran in November. But Washington has given sanctions to some buyers of Iranian crude, raising fears of an oil boom next year.