The OPEC talks are not making progress, as the Saudis refuse the exclusion of Iran from the production of cuts - Saudi Arabia

2/2
© Reuters. Two sources: OPEC has not yet accepted a definitive agreement with Iran's exemption request

2/2

From Rania El Gamal, Ahmed Ghadar and Olesia Estakhova

VIENNA (Reuters) – OPEC talks on oil production cuts came to a standstill on Friday when OPEC's largest producer, Saudi Arabia, refused to grant sanctions for Iranian exemptions from planned cuts, OPEC sources reported.

Saudi energy minister Khalid al-Falih responded in absentia in response to a Friday question if he was sure that Friday's meetings would lead to an agreement.

The Organization of Petroleum Exporting Countries (OPEC) meets in Vienna for the second day in a row, before talks with non-OPEC producers led by Russia on Friday.

On Thursday, OPEC sources said the group tentatively agreed to cut oil production, but was unable to decide on specific parameters pending a commitment from Russia.

On Friday four sources of Opec and not Opec said that Saudi Arabia, the Iranian archbishop to whom new US sanctions were imposed in November, was also delaying a final agreement.

"Iran will insist on an 'exception until the sanctions are not resolved," said an OPEC source. Another source said that Tehran wanted the final declaration of OPEC to specifically state that Iran was exempt from cuts.

Saudi Arabia is under pressure from US President Donald Trump to help the world economy by not cutting supplies.

A cut in OPEC output would provide Tehran support by raising the price of oil.

The crisis for the killing of Saudi journalist Jamal Khashoggi at his consulate in Istanbul in October could make it more difficult for OPEC to make a decision. Trump supported the Saudi hereditary prince Mohammed bin Salman, despite the demand by many US politicians to impose severe sanctions on Riyadh.

The US ambassador to Iran Brian Hawk met with Saudi energy minister Khalid al-Falih in Vienna this week, in unprecedented development ahead of the OPEC meeting. Saudi Arabia initially denied the talks between Hawk and al-Faleh, but later confirmed it.

"The political pressure of the United States is clearly a dominant factor in this meeting, which limits the moves of Saudi Arabia to rebalance the market," said Gary Ross, managing director of Black Gold Investors and veteran observer of Opec's activities .

A Russian dilemma

It fell by about a third from October to less than $ 60 a barrel, while Saudi Arabia, Russia and the United Arab Emirates increased production to offset a decline in exports to Iran, the third producer of OPEC.

The low price pushed OPEC and its allies to discuss production cuts, according to reports from Al-Falih that potential cuts from contractors range from half a million to 1.5 million bpd.

"Excluding Iran is the biggest obstacle," said Energy Aspects in a statement. "If an agreement is not reached, the timing of the agreement will be moved to the first quarter of 2019."

Faleh said that a reduction of one million barrels a day would be acceptable and that the basic concept so far, but added that there is need of Russia's commitment in large quantities.

Russian Energy Minister Alexander Novak met President Vladimir Putin in St. Petersburg on Thursday and returned to the Austrian capital this morning.

The OPEC delegates said that the organization and its allies could cut the production of one million barrels a day if Russia had contributed 150,000 barrels a day. If it contributes to around 250,000 barrels, the total reduction could exceed 1.3 million barrels per day.

A source from the Russian Ministry of Energy said today that Moscow is ready to contribute a reduction of about 200 thousand barrels a day and that Iran and not Russia is the main obstacle that seems to be currently before reaching an agreement.

In recent years Russia, Saudi Arabia and the United States have been at the forefront of crude oil producers. The United States is not involved in any initiative to limit production due to antitrust laws and the fragmentation of the oil sector.

On Thursday, US government data showed that the United States had for the first time become net exporters of crude oil and refined products, highlighting how high output caused a change in the supply equation on world markets.

(Prepared by Moataz Mohammed for the Arabic edition – by Ahmed Elhamy)

Leave a comment

Send a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.