Saudis said to quit talks with non-OPEC nations as OPEC deal no closer - UPDATED

Saudis said to quit talks with non-OPEC nations as OPEC deal no closer - <span style="color: red;">UPDATED</span>
# 24 November 2016 21:18 (UTC +04:00)

Baku-APA. Saudi Arabia pulled out of planned talks with non-OPEC nations including Russia as disagreements about how to share the burden of supply cuts stood in the way of a deal to boost prices just days before a make-or-break meeting in Vienna, APA Reports quoting Blomberg.

 

OPEC officials were scheduled to meet with non-members including Russia on Monday before a ministerial meeting in Vienna two days later. The meeting was later canceled entirely after the Saudis decided not to take part.

 

Instead, the group called another internal meeting to try to resolve its own differences, particularly the question of whether Iran and Iraq are willing to cut production, said two delegates, asking not to be identified because the deliberations are sensitive. Saudi Arabia wants an OPEC deal in place before conversations with other producers such as Russia, one delegate said.

 

 

The setback suggests that Saudi Arabia remains split from its two biggest Middle Eastern rivals at the Organization of Petroleum Exporting Countries. Iran insists it should be allowed to restore output to pre-sanctions levels, while it remains unclear if Iraq is still disputing the OPEC supply estimates that would provide the basis for any cuts. With less than a week until the crucial ministerial meeting, the refusal of just one major producer to participate could scuttle the whole of the agreement reached in September in Algiers.

"The whole Algerian deal wasn’t clear from beginning and their approach was ‘leave it to later’,” said Abdulsamad al-Awadhi, a former OPEC official for Kuwait who is now an independent analyst in London. Two months after the initial accord "OPEC leaders are confused and the group’s founding members can’t solve differences, but they want to have a deal with non-OPEC. This a tough call."

 

Brent crude fell in London 3 percent to $47.50 a barrel as of 5:37 p.m. Friday. In New York, West Texas Intermediate fell to $46.42 a barrel.

 

In late September, OPEC agreed the outline of its first production curbs since the global financial crisis in 2008. Since then, the group has spent two months trying to agree how to share the cuts, which would bring its production to a range of 32.5 million to 33 million barrels per day. OPEC estimates that it pumped 33.6 million barrels a day last month.

 

Technical experts from member countries met in Vienna this week to finalize the details of the cuts. After two days of meetings, the talks concluded without resolving the issue of Iran and Iraq, instead deferring the matter to ministerial talks on Nov. 30. Those officials will now reconvene on Monday in an effort to overcome the impasse, two delegates said.

Ministers from Saudi Arabia and Iran won’t arrive in Vienna until Nov. 29, said OPEC delegates, leaving little time for them to hold negotiations before the big meeting.

 

Saudi Arabia, OPEC’s de-facto leader, is ready to cut production, but only if all members share the burden of cuts equitably and transparently. In practice, that means the kingdom thinks Iraq needs to cut output and Iran has to freeze production around current levels, one OPEC delegate said last week.

 

Prior to the Nov. 23 comments by Prime Minister Haider Al-Abadi, Iraq had sought an exemption from joining any production cuts, arguing that its fight against Islamic State justifies special treatment. That assertion still leaves unresolved the significant issue of exactly how much the country would reduce production, and from what level, said a Gulf OPEC delegate Thursday.

 

Iran has insisted it won’t accept any limits on its production until it has returned to the pre-sanctions level above 4 million barrels a day.

 

Without an OPEC deal, the International Energy Agency predicted that 2017 will be the fourth consecutive year in which supply runs ahead of demand, potentially causing lower prices.

 

***

 

23:18

 

Baku-APA. Top OPEC oil exporter Saudi Arabia has told the producer group it will not attend talks on Monday with non-OPEC producers to discuss limiting supply, OPEC sources said, as it wants to focus on having consensus within the organization first, APA reports quoting Reuters.

 

The Nov. 28 meeting in Vienna was planned to discuss the contribution that producers outside OPEC will make to a proposed supply-limiting agreement. OPEC oil ministers meet on Wednesday in an effort to finalize their deal.

 

"There is an official letter from (Saudi Arabia) saying (it is) not attending the meeting because the ministers should agree to the cut and then present the agreement to non-OPEC countries," an OPEC source said. "This will be more effective‎."

 

The Organization of the Petroleum Exporting Countries is trying to cement a preliminary September agreement in Algeria that would reduce its production to between 32.5 million and 33 million barrels per day, its first supply curb since 2008.

 

OPEC aims to remove a supply glut and prop up oil prices, which at below $48 a barrel are less than half their level of mid-2014. Oil prices extended an earlier decline on Friday after news of the Saudi no-show.

 

The organization also wants non-OPEC producers such as Russia to curb output. Russian Energy Minister Alexander Novak on Thursday said OPEC had proposed that non-OPEC cut oil production by 500,000 bpd.

 

Monday's talks will be converted into another OPEC-only meeting, OPEC sources said, to try to resolve the group's internal differences before the ministerial gathering on Wednesday.

 

A similar OPEC and non-OPEC meeting in October resulted in no specific pledges from outside producers to cut output, with attendees citing the lack of an internal OPEC agreement.

 

Saudi Arabia had asked that this earlier meeting be called off, but was convinced by other members to attend in order not to embarrass the group, a source said.

#
#

THE OPERATION IS BEING PERFORMED