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OPEC and Russia agree to slash oil output despite Mr Trump pressure

Gasoil News - Published on Mon, 10 Dec 2018

Image Source: Moneycontrol
Reuters reported that OPEC and its Russia-led allies agreed to slash oil production by more than the market had expected despite pressure from US President Mr Donald Trump to reduce the price of crude. The producer club will curb output by 0.8 million barrels per day from January while non-OPEC allies contribute an additional 0.4 million bpd of cuts, Iraqi Oil Minister Mr Thamer Ghadhban said after OPEC concluded two days of talks in Vienna. Oil prices jumped about 5 percent to more than $63 a barrel by 1500 GMT as the combined cut of 1.2 million bpd was larger than the minimum 1 million bpd that the market had expected.

Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, has faced demands from Trump to help the global economy by refraining from cutting supplies. An output reduction also would provide support to Iran by increasing the price of oil amid attempts by Washington to squeeze the economy of OPEC’s third-largest producer.

United Arab Emirates Energy Minister Mr Suhail bin Mohammed al-Mazroui told a news conference “We will never address geopolitical issues at OPEC.”

Russian Energy Minister Mr Alexander Novak praised the ability of his Saudi counterpart Khalid al-Falih “to find a solution in the most difficult situation”, indicating Russia was on board. The OPEC deal had hung in the balance for two days – first on fears that Russia would cut too little, and later on concerns that Iran, whose crude exports have been depleted by US sanctions, would receive no exemption and block the agreement. But after hours of talks, Iran gave OPEC the green light and Russia indicated it was ready to cut more.

A meeting of OPEC and non-OPEC producers quickly approved the deal, according to two OPEC sources. The cut will last for six months from January, Ghadhban said, and take October as the baseline. OPEC and Russian output was lower in October than in November. However, OPEC might not disclose individual output quotas, sources said.

Mr Bob McNally, president of U.S.-based Rapidan Energy Group, said that “The OPEC+ cut is fuzzy on details and will likely result in less reduction than the headline figure of 1.2 million bpd. President Trump will not be happy to see today’s headlines, but how strongly he reacts depends mainly on whether crude prices rise strongly as a result in coming days and weeks.”

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Posted By : Joykumar Irom on Mon, 10 Dec 2018
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