Meeting of OPEC and non-OPEC states cancelled
By Trend
Saudi Arabia pulled out of planned talks with non-OPEC nations including Russia as disagreements about how to share the burden of supply cuts stood in the way of a deal to boost prices just days before a make-or-break meeting in Vienna, Bloomberg reported.
OPEC officials were scheduled to meet with non-members including
Russia on Monday before a ministerial meeting in Vienna two days
later. The meeting was later cancelled entirely after the Saudis
decided not to take part.
Instead, the group called another internal meeting to try to
resolve its own differences, particularly the question of whether
Iran and Iraq are willing to cut production, said two delegates,
asking not to be identified because the deliberations are
sensitive. Saudi Arabia wants an OPEC deal in place before
conversations with other producers such as Russia, one delegate
said.
The setback suggests that Saudi Arabia remains split from its two
biggest Middle Eastern rivals at the Organization of Petroleum
Exporting Countries. Iran insists it should be allowed to restore
output to pre-sanctions levels, while it remains unclear if Iraq is
still disputing the OPEC supply estimates that would provide the
basis for any cuts. With less than a week until the crucial
ministerial meeting, the refusal of just one major producer to
participate could scuttle the whole of the agreement reached in
September in Algiers.
"The whole Algerian deal wasn’t clear from beginning and their
approach was ‘leave it to later’,” said Abdulsamad al-Awadhi, a
former OPEC official for Kuwait who is now an independent analyst
in London. Two months after the initial accord "OPEC leaders are
confused and the group’s founding members can’t solve differences,
but they want to have a deal with non-OPEC. This a tough call."
Brent crude fell in London 3 percent to $47.50 a barrel as of 5:37
p.m. Friday. In New York, West Texas Intermediate fell to $46.42 a
barrel.
In late September, OPEC agreed the outline of its first production
curbs since the global financial crisis in 2008. Since then, the
group has spent two months trying to agree how to share the cuts,
which would bring its production to a range of 32.5 million to 33
million barrels per day. OPEC estimates that it pumped 33.6 million
barrels a day last month.
Technical experts from member countries met in Vienna this week to
finalize the details of the cuts. After two days of meetings, the
talks concluded without resolving the issue of Iran and Iraq,
instead deferring the matter to ministerial talks on Nov. 30. Those
officials will now reconvene on Monday in an effort to overcome the
impasse, two delegates said.
Ministers from Saudi Arabia and Iran won’t arrive in Vienna until
Nov. 29, said OPEC delegates, leaving little time for them to hold
negotiations before the big meeting.
Saudi Arabia, OPEC’s de-facto leader, is ready to cut production,
but only if all members share the burden of cuts equitably and
transparently. In practice, that means the kingdom thinks Iraq
needs to cut output and Iran has to freeze production around
current levels, one OPEC delegate said last week.
Prior to the Nov. 23 comments by Prime Minister Haider Al-Abadi,
Iraq had sought an exemption from joining any production cuts,
arguing that its fight against Islamic State justifies special
treatment. That assertion still leaves unresolved the significant
issue of exactly how much the country would reduce production, and
from what level, said a Gulf OPEC delegate Thursday.
Iran has insisted it won’t accept any limits on its production
until it has returned to the pre-sanctions level above 4 million
barrels a day.
Without an OPEC deal, the International Energy Agency predicted
that 2017 will be the fourth consecutive year in which supply runs
ahead of demand, potentially causing lower prices.
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