VIENNA, Dec 6 — A meeting of the Opec group of major oil-exporting countries broke up late yesterday without agreement on cutting production to head off pressure on prices from abundant reserves and slowing global economic growth.
The producers had been mulling cuts above their previous agreement to reduce output by 1.2 million barrels per day from October 2018 levels.
That deal was originally fixed in December last year and extended at Opec’s last meeting in July.
After more than six hours of talks yesterday, delegates meeting in Vienna were unable to sign off on the details of an agreement on how further cuts should be shared out.
Ministers were unusually tight-lipped as they filed out of yesterday’s meeting in the Austrian capital.
Asked whether the assembled producers had reached agreement, Venezuelan Oil Minister Manuel Quevedo said simply: “Tomorrow”.
Today, Opec will reconvene with the so-called Opec + group of partners, chief among them the world’s second-largest producer Russia.
Earlier yesterday, Russian Energy Minister Alexander Novak said a preliminary gathering of ministers had recommended an additional cut of 500,000 barrels per day be considered for the first quarter of 2020.
Before the meeting, observers had speculated that production cuts and a boost to prices might suit Saudi Arabia as it launched the landmark IPO of its national oil company Aramco.
The initial stock offering was the largest ever, raising US$25.6 billion, two sources told AFP.
However, Edward Moya, an analyst at Oanda, told AFP that the new cuts would be “more of a housekeeping move that will narrow the gap between (producers’) current target and the overcompliance we have seen from the alliance”.
Saudi Arabia has stayed within the quota it was assigned under the current deal even while other producers — including Russia — have been exceeding theirs.
‘Burn injustice, not oil’
A forbidding global economic context means that oil producers have been left with little room for manoeuvre as they seek to support prices.
A trade war with the US is slowing growth in China, normally an avid consumer of oil, and the European economy is barely expanding.
Meanwhile, output by oil producers outside Opec is breaking records: The US has been the world’s biggest producer since 2018, Brazil and Canada have also increased output and others such as Norway are planning to do so.
According to the latest US estimates, its total domestic stocks now stand at an enormous 452 million barrels.
Prices have held relatively steady since the last Opec meeting, with a barrel of Brent crude hovering around the US$60 mark, apart from a spike in September sparked by attacks on Saudi oil installations.
While that is a comfortable price for the likes of Russia, whose 2019 budget is based on a price of around US$42 a barrel, it is too low for countries such as Saudi Arabia.
After a marked rise on Wednesday in expectation of the Opec meeting, oil prices were more subdued yesterday.
With trading ending before the decision was reached, the European benchmark of Brent was up 0.6 per cent while its American counterpart WTI was unchanged at US$58.43 dollars.
Ahead of yesterday’s meeting, dozens of climate change activists gathered outside Opec headquarters in a silent protest, holding banners that read: “Burn injustice not oil” and “Fossil fuels have got to go”.
Opec Secretary General Mohammed Barkindo — who called climate change activists the “greatest threat” to the oil industry during the organisation’s last meeting in July — received several of them, insisting that “there are no climate change deniers in Opec”. — AFP
