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Commodities

OPEC officials stalled on deal to implement supply cut

PUBLISHED : Saturday, 29 October, 2016, 3:28am
UPDATED : Saturday, 29 October, 2016, 3:28am

OPEC officials meeting in Vienna on Friday to work out the details of their plan to reduce oil production had yet to reach agreement after hours of talks, amid objections by Iran which has been reluctant to even freeze its output, OPEC sources said.

The meeting of the High Level Committee is comprised mainly of OPEC governors and national representatives - officials who report to their respective ministers.

Talks were continuing 11 hours after they started at 10 a.m. local time (0800 GMT) but while there was still no agreement, progress was being made, one source said.

“There is no agreement yet, all agree except Iran,” one OPEC source said, adding Iran was asking for an exemption.

Last month in Algiers, the Organization of the Petroleum Exporting Countries agreed to reduce production of crude oil to a range of 32.50 million to 33 million barrels per day, its first output cut since 2008, to prop up prices.

The proposed plan faces potential setbacks from Iraq’s call for it to be exempt and from countries including Iran, Libya and Nigeria whose output has been hit by sanctions or conflict and want to raise their output.

“It is getting complicated,” an OPEC delegate said before the meeting began on Friday. “Every day there is a new issue coming up.”

However, other OPEC officials including Secretary-General Mohammed Barkindo have said they are optimistic a final deal will be reached.

“Our deliberations today, and tomorrow with some non-OPEC producers, could very well have fundamental ramifications for the market, as well as for the medium to long term of the industry,” Barkindo said in a speech on the opening day of the two-day meeting, according to a text provided by OPEC.

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The committee does not decide policy and will instead make recommendations to the next OPEC ministerial meeting on November 30, also in Vienna.

How much each of the 14 OPEC members will produce is one of the matters the committee is examining.

Iraq, OPEC’s second-biggest producer, said this week that it would not cut output and should be exempted from any curbs as it needs funds to fight Islamic State. Meanwhile Iran has insisted on its right to recover market share after Western sanctions were lifted in January.

Baghdad’s stance is likely to face opposition from other OPEC members, an OPEC source said on Friday.

The meeting is scheduled to continue for a second day on Saturday when representatives from non-OPEC nations, which OPEC wants to curb supplies as well, will also attend.

Non-OPEC nations sending representatives to Saturday’s talks are Russia, Kazakhstan, Mexico, Oman, Azerbaijan, Brazil and Bolivia.