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After six hours of discussions, OPEC didn’t agree on Thursday on any specific oil production cut agreement as members are quarrelling on how to divvy up the production cuts and who will be exempt from reducing output, while all signs point to the cartel waiting to see how much Russia will agree to cut before announcing a possible deal.
OPEC canceled its scheduled after-meeting press conference on Thursday and Saudi Arabia’s Energy Minister Khalid al-Falih said the cartel was still “deliberating” an agreement, after the meeting ended. The main proposal that was discussed was a cut of around 1 million bpd.
“I am not confident of an agreement,” al-Falih said, adding that “Russia is not ready for a substantial cut.”
Russia’s Energy Minister Alexander Novak will be joining the talks with non-OPEC on Friday, after having received instructions from President Vladimir Putin on Russia’s position on joining the cuts.
Even without having to wait for Russia’s consent, the OPEC meeting was more contentious than usual, with the main “sticking point” being getting agreement from all producers, according to the Saudi minister.
Another sticking point was who could be exempt from the cuts.
Iran is not taking part in any production cuts until it is under U.S. sanctions, its oil minister Bijan Zanganeh has said, adding that today’s talks we “hard”. Asked to clarify, he replied “Harder than Ever...but we are trying to reach an agreement.”
According to a delegate who spoke to Bloomberg, one of the contentious debates in Thursday’s meeting was whether Iran will get an exemption.
Libya has also asked for exemption, citing fragile security situation, while Nigeria, which together with Libya was exempted from the original deal, may be open to joining cuts. According to Nigerian oil minister Emmanuel Kachikwu, the bigger producers within OPEC should shoulder more of the supply reductions.
Apart from counting barrels and looking at demand forecasts, OPEC was dealing today with discontent from some members who blame Saudi Arabia for creating the oversupply by pumping at records, and for giving non-OPEC Russia a very big say in the cartel’s oil production policy.
The deal-or-no-deal saga continues on Friday, while the oil market was left hanging, with prices down 3% at 1:16 p.m. EDT.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.