OPEC Discusses Oil Cut After Saudis Say They Won't Shock Market - Ester Holdings

OPEC Discusses Oil Cut After Saudis Say They Won’t Shock Market

Bloomberg – OPEC ministers discussed cutting their oil output by about 1 million barrels a day, a proposal that would go a little further than Saudi Arabia’s suggestion of a reduction that wouldn’t shock the market.

Under pressure after a collapse in oil prices last month, the kingdom is seeking to walk a fine line between preventing a surplus and appeasing U.S. President Donald Trump.

In one proposal being considered at talks on Thursday, OPEC could cut its own output by 900,000 to 1 million barrels a day and then seek further curbs from non-OPEC partners, one delegate said, asking not to be named as an agreement hasn’t yet been reached. Ministers are studying participation levels for such a proposal before potentially putting it to key ally Russia, the delegate said.

That would be a more bullish outcome than Saudi Energy Minister Khalid Al-Falih had hinted at early in the day, when he said a reduction of about 1 million barrels a day from the entire OPEC+ coalition should be adequate and “certainly we don’t want to shock the market.”

After four hours of discussions in the Austrian capital, ministers were still poring over proposals and one delegate said it’s possible the group won’t announce a deal on Thursday. Al-Falih had earlier said that “if everybody is not willing to join and contribute equally, we will wait until they are.”

Saudi Arabia, OPEC’s de facto leader, has made clear that it won’t shoulder the burden of trimming production alone. Its cooperation with Russia shows how much OPEC has changed since 2016 when the two countries ended their historic animosity and started to manage the market together. The alliance has transformed OPEC into a duopoly in which Russia, which isn’t a formal member of the cartel but part of the production-cuts alliance, is asserting its power.

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