Saudi, Russia leave world guessing after OPEC meeting

Falih said before the meeting that the "OPEC+" group would be happy with a cut of just 1 million bpd.

Members of the Organization of the Petroleum Exporting Countries (OPEC), as well as the cartel's allies, are meeting at OPEC's headquarters in Vienna on Thursday.

Earlier on Thursday, ministers were discussing a proposal to curb their oil output by about 1 million barrels a day, which would go a little further than Saudi Arabia's preference for a moderate reduction that wouldn't shock the market.

OPEC, an intergovernmental organisation of 15 nations, is looking to slash oil production over fears of a glut in supply which has seen prices crashing globally in recent weeks.

"While the large crude oil inventory drop was notable, the surge in exports of crude oil to over 3 million barrels per day was remarkable", said John Kilduff, partner at energy hedge fund Again Capital LLC in NY. However, he noted that all the participants will be listened to in order to arrive at a consensus on the issue.

He continued, saying: "If not everyone was ready to cut production then we will wait, and the options include reducing production with 500,000 to 1.5 million barrels per day".

Saudi Arabia is hoping Russian Federation, one of OPEC's most important allies, cuts down its production by about 250,000 barrels per day, but Russian Federation wants to limit its cut to half that amount.

"Hopefully OPEC will be keeping oil flows as is, not restricted", he wrote on Twitter on Wednesday. But they're contending with vociferous opposition from the US president, who's taken to using his Twitter account to berate the group's policies and sees low oil prices as key to sustaining America's economic growth.

"Trump is making America great again", said Joe McMonigle, an oil analyst at Hedgeye Risk Management LLC and a former senior official at the U.S. Energy Department.

The long rally in oil prices lasted until October.

The remarks came just a day prior to OPEC's meeting in Vienna, piling pressure on the Saudi-led cartel, Russian Federation and other non-member nations over potential global oil policy-making. Delegates said details of how to share that out and the extent of the contribution from non-OPEC allies remained unresolved.

The US, Al-Falih said, "is not in a position to tell us what to do". The market has been lower all day due to concern that planned production cuts from the Organization of the Petroleum Exporting Countries will be smaller than originally anticipated.

"Markets.believe the production cut deal will be in range of 1-1.3 million bpd", ANZ bank said on Thursday.

During Thursday's meeting, OPEC leaders are expected to discuss how to stabilize crude oil production after USA prices plunged by 22-percent in November - making it the worst month since the financial crisis in 2008. A cut of a million barrels would be the minimum to support the market, and anything less could see the price of oil fall another $10 a barrel, according to Wilson. Falih also noted that production from some OPEC producers is falling.

While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump's decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi.

  • Wendy Palmer