Wednesday, 19 December, 2018

Trump urges against oil production cut ahead of OPEC meeting

Oil prices skid amid global stock market slump, swelling US supply Trump asks OPEC not to cut production
Nellie Chapman | 06 December, 2018, 13:48

Novak returns to Vienna on Friday for talks between Opec and its allies, following discussions among Opec producers on Thursday.

"I'm cautiously optimistic that a deal gets done, but the devil will be in the detail", said Mohammad Darwazah, a director at Medley Global Advisers. "It is still under discussion", one delegate said.

Russia's oil giant Lukoil said it's ready to cut production if the upcoming meeting results in a deal to prop up prices, the company's CEO Vagit Alekperov told reporters, according to TASS news agency. Possible output cuts by OPEC and its allies ranged from 0.5-1.5 million bpd, and 1 million bpd was acceptable, he said.

"The oil cut will be between 1.0 and 1.3 million bpd".

Bank of America Merrill Lynch said in its 2019 economic outlook, published on Tuesday, that "most major economies are likely to see decelerating activity", although it added that "a steady stream of monetary and fiscal stimulus measures" was expected to stem the slowdown.

Novak said on Thursday that Russian Federation would find it harder to cut oil output in winter than other producers because of the cold weather.

OPEC meets in Vienna on the verge of an oil production cut that would defy U.S. President Donald Trump's plea to keep the taps open.

By how much oil production will be reduced is unclear, but de facto leader of OPEC Saudi Arabia, the world's largest oil producing country, reportedly wants to curb output by at least 1.3 million barrels per day, or 1.3 percent of global production.

The OPEC meeting comes at a time when the oil market is near the bottom of its worst price plunge since the 2008 financial crisis. In order to lower oil prices, Trump allowed a number of countries to continue to buy Iranian crude.

On Thursday, Brent futures fell more than 2% as traders began to doubt Opec would deliver a significant cut.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. But Washington gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

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). Most producers made clear they agree on the need for a cut in oil production. Trump wrote in a tweet on Wednesday.

One issue that might complicate relations between the USA and OPEC is the murder of Saudi Arabian journalist Jamal Khashoggi by people linked to the government in Riyadh. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many USA politicians to impose stiff sanctions on Riyadh. Only the headline has been changed.