OPEC resumes talks after Russia rejects plan to reduce oil output

A table with OPEC logo is seen during the presentation of OPEC's 2013 World Oil Outlook in Vienna , November 7, 2013. REUTERS/Leonhard Foeger
A table with OPEC logo is seen during the presentation of OPEC’s 2013 World Oil Outlook in Vienna, Austria November 7, 2013. REUTERS/Leonhard Foeger

OPEC kicked off a further day of talks on oil-production curbs after a summit on Thursday ended with no deal, as Russia resisted the big output cut that Saudi Arabia was demanding.

Discussions now center on a proposed reduction from OPEC and its allies of about 1 million barrels a day, with OPEC itself shouldering 650,000 barrels of the burden, delegates said. Such a deal remains far from certain after six hours of talks on Thursday concluded with Saudi Energy Minister Khalid Al-Falih saying he wasn’t confident an agreement could be reached.

“Not everybody is ready to cut equally,” Al-Falih told reporters in Vienna. “Russia is not ready for a substantial cut.”

Another sticking point in the talks is Iran’s contribution, a delegate said. The Persian Gulf nation is currently subject to U.S. sanctions and sees no possibility of agreeing to curb its output, Oil Minister Bijan Zanganeh said Friday. Other members said it should participate, according to a delegate.

The lack of a deal so far shows how the Organization of Petroleum Exporting Countries is under pressure from forces re-drawing the global oil map, leaving it increasingly dependent on the support of non-member Russia while also subject to vociferous opposition from U.S. President Donald Trump. In a striking development, the U.S. revealed that it turned into a net exporter of petroleum for the first time in 75 years last week thanks to the shale boom.

The oil market reacted negatively to OPEC’s setback, with Brent crude sliding 2.4 percent in London on Thursday. Prices extended declines below $60 a barrel on Friday.

Russia, which initially sought a 100,000 to 150,000-barrel-a-day reduction as part of a new deal, may agree to a slightly larger cut depending on OPEC’s decision on its own output, a delegate said. Moscow insists its cut should be gradual and reconsidered after the first quarter since the market may shift, the delegate said.

Russian President Vladimir Putin and Energy Minister Alexander Novak discussed cooperation within the so-called OPEC+ alliance during several meetings on Thursday, Putin’s spokesman Dmitry Peskov said in Moscow. Novak is due to meet his counterparts in the OPEC+ coalition later Friday. If Russia decides to make a sizable cut, the cartel would follow up.