OPEC, Other Major Oil Producers Agree to Cut Global Oil Production

OPEC,crude prices,oil prices

A look at recent trends in the oil economy suggests that OPEC might be losing its historical dominance

OPEC is holding talks with other oil-producing nations including Russian Federation at its headquarters in Vienna, Austria.

"Low prices are actually not good for the USA economy, " Al-Falih said, a riposte to Trump's repeated calls for OPEC to open the taps.

The oil market reacted negatively to OPEC's setback, with Brent crude sliding 2.4 percent to $60.06 a barrel in London on Thursday. Prices on Friday settled below the session's highs.

OPEC countries are mulling a possible cut to oil production in an attempt to stabilize prices as they meet for a second straight day.

OPEC decisions aren't shaped by Twitter: Russia

"As long as a little producer like me can expect $50 or better, we can do fine; $50 works for me", said Harvey Howell, president of H.H. Howell Inc, a San Antonio, Texas, producer. OPEC members include Algeria, Angola, Congo, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. The alliance has transformed the cartel into a duopoly in which the Kremlin is asserting its power.

In the last week of November, the country exported more oil, gasoline and other petroleum products than it imported, marking a milestone for the domestic industry and for a White House that has been eager to secure what it calls "energy independence" with new domestic production.

Despite the agreement, “the math, as usual, remains fuzzy, ” said Matthew Parry, head of long-term research at Energy Aspects. "The market won't care if tomorrow they manage a sizable cut with proper metrics, but that's still a big if".

"OPEC group countries are contributing 800,000 barrels per day as a cut, and the non-OPEC (countries) will be contributing 400,000 barrels per day", Emirati Oil Minister Suhail Mohamed al-Mazrouei said at a news conference. That was in line with the Saudi minister's preference for a moderate reduction that wouldn't "shock the market". The one in 1979 caused oil prices to double.

Novak is expected to return to Vienna on Friday to join the talks. From an initial target of 1.3-1.5m bpd output cut, the final deal was for 1.2m bpd only.

Nigeria, which was previously exempted from similar agreement, was unable to secure a deal as Iran, now facing sanction from U.S, Venezuela and Libya were exempted. Those countries, along with Nigeria, were opposed to participating in a supply reduction, the delegate said.

The cut will be based on October output and will be subject to review in April, said a spokesman for the Vienna meeting, Tafal al-Nasr.

Analysts at Danske Bank see positive developments for a move higher in crude oil prices, like today's OPEC agreement.

Mr Trump tweeted on Wednesday: "Hopefully OPEC will be keeping oil flows as is, not restricted".

But it was clear the Saudis did want cuts, though Al-Falih warned on Tuesday that it was "premature" to talk about them.

A Russian Energy Ministry source said on Friday Moscow was ready to contribute a cut of around 200,000 bpd and that Iran, not Russia, now seemed the main hurdle for a deal.

Saudi Arabia, OPEC's de facto leader, has faced demands from US President Donald Trump to help the global economy by refraining from cutting oil supplies. Off-topic, inappropriate or insulting comments will be removed.

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