OPEC members expected to agree cut in crude production

Oil prices skid amid global stock market slump, swelling US supply

The Organisation of the Petroleum Exporting Countries (Opec) has made a planned cut in oil production effectively conditional on the contribution from non-Opec producer Russian Federation, delegates said on Thursday as the group gathered in Vienna for a meeting aimed at supporting battered oil prices.

According to Reuters, five unnamed delegates said ahead of the meeting that the group's preferred level of supply cuts would effectively be conditional on Moscow's contribution.

Oil was down $59.48 a barrel on Thursday, after a planned Opec press conference on the group's deal failed to materialise.

The measure is aimed at controlling global oil prices that have seen a dramatic crash of more than 30 percent over the last two months, placing the budgets of oil-exporting nations under considerable pressure.

"OPEC is an independent organization, not a part of the US Department of Energy to take orders from Washington", said Zangeneh on Wednesday.

Three delegates said Opec and its allies could cut output by 1 million barrels per day if Russian Federation contributed 150,000 bpd of that reduction.

At a December 2016 meeting, OPEC members had agreed to a production cut to battle a supply glut that saw oil prices drop to $25 per barrel.

Prices have already plunged more than 30% over the past two months and a barrel of Brent crude, the European benchmark, now stands at around $60.

While ministers met in OPEC's Vienna headquarters, Trump tweeted that the "world does not want to see, or need, higher oil prices!"

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The Vienna meeting also comes only days after Qatar announced it would be the first country from the Middle East to withdraw from OPEC, saying it wanted to focus more on gas production. The power of OPEC has been diminished, undercutting one of the major geopolitical forces of the last half century.

"We don't need permission from anyone to cut", said Falih on Thursday.

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day.

While the net balance shows the USA is selling more petroleum than buying, American refiners continue to buy millions of barrels each day of overseas crude and fuel. "How OPEC communicates this to the market may be just as important as what gets done".

Iran has said it is carefully monitoring the next steps by some OPEC members and their allies which have "arbitrarily" ramped up oil production, leading to a crash in prices. By some estimates, the USA this year became the world's top crude producer. Trump said on Twitter on Wednesday, Xinhua news agency reported.

Nonetheless, Saudi Arabia is in a delicate position, in the wake of the murder of opposition journalist Jamal Khashoggi.

Led by Saudi Arabia, OPEC's crude oil production has risen by 4.1 percent since mid-2018, to 33.31 million barrels per day (bpd). Falih also noted that production from some OPEC producers is falling.

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