Oil prices fell nearly 5% on Thursday to less than $ 59 a barrel, as Saudi Arabia reported that producers were working for an agreement to cut production that may not be at the height market expectations.
Khalid al-Falih, the energy minister of the kingdom, told reporters ahead of a meeting of oil ministers in Vienna that OPEC and allies outside the cartel, including Russia, were still working on a agreement by Friday.
But he said that the preference for Saudi Arabia – the de facto leader of Opec – was for a "sufficient but not too big cut" adding that 1m barrels a day between Opec and non-OPEC countries "would be adequate".
This happens when oil analysts say that it would take at least 1.3 million cubic meters a day to balance the market and sustain oil prices. Brent crude fell 4.7% to $ 58.75 a barrel.
The kingdom calls for cuts from all members of the producers' cartel, saying that the reductions should be "just and fair", including from Russia and those exempt from previous agreements such as Libya and Nigeria.
When asked if an agreement was not reached, he said that all options were on the table, but added that Russia – the biggest exporter outside the cartel and considered crucial to reach an agreement – has "done" a promise "to cut.
Brent crude has declined by more than 30% since October, when the United States issued sanctions for large Iranian oil buyers, while production by global producers – including US shale producers – has increased.
The expected production cuts come despite pressure from US President Donald Trump, who has sustained high levels of production, describing lower oil prices as a "tax cut" for consumers.
At the June meeting of oil ministers, Saudi Arabia pledged to relax the oil strands that had been in place since January 2017, to offset a decline in Iranian exports following the entry into force of sanctions , bringing production to over 11 million barrels per day.
But worries about a global economic slowdown that could affect oil demand and see stock-swelling again have affected large producer countries that rely on export revenues to fill government coffers.
Bob McNally, at the Rapidan Energy Group, said discussions are continuing and Opec led by the Saudis could be willing to curb production to higher levels if Russia shows real willingness to contribute, possibly pursuing a collective reduction until to 1.3 million barrels a day.
Still, he said, "Trump will not let go". "Since the [US midterm] elections, moved away from preventing price hikes looking for a "tax reduction". "