The joint ministerial committee of OPEC and non-OPEC ministers that oversaw the production cuts from 2017 and the first half of this year has once again recommended that the cartel and its partners reduce crude oil production, TASS reports, citing the energy minister of Oman, Mohammed bin Hamad Al Rumhy.
"We just agreed on the reduction. Actually, the level of reduction will be discussed in the next two days," Al Rumhy told media in Vienna. Later today, however, OPEC will come out with a statement on the topic that will reveal its final position on the cuts amid a lot of internal disagreement.
Tomorrow, Russia and several other non-OPEC producers will join the talks and the amount of the cuts-if agreed-will be specified. Al Rumhy said he believed OPEC+ could reduce its combined output by 1 million bpd. The agreement will be in force for six months, the minister also said.
Talk about cuts began last month, initiated by Saudi Arabia amid slumping oil prices. Analysts projected cuts in the range of 1 to 1.4 million bpd but most acknowledged this time it might be harder for the Kingdom to get everyone on board. Iraq is not the only one that can't really afford the cuts: Iran has stated it will not discuss its production quota while under sanctions and Russia has made it clear it was fine with prices where they are. Yet president Putin said at the G20 meeting cooperation between Russia and Saudi Arabia would continue, which suggested Russian oil companies will join the cuts.
If Saudi Arabia and Russia prevail in the discussions, the only issue would be the size of the cut unless Iraq decides to quit the cartel altogether, as Barclays' David Cohen suggested in a chat with CNBC. If that happens, whatever cuts are agreed would have about the same effect on prices as the entry into effect of U.S. sanctions against Iran after market players had months to prepare for them.
UPDATE: OPEC failed to reveal a solid agreement in Vienna after hours of meetings. The cartel cancelled its news conference, awaiting the Russian delegation set to arrive on Friday - read more here
By Irina Slav for Oilprice.com
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