OPEC Heads for Status Quo as Members Clash Over Crude Output Cut
(Bloomberg) -- OPEC looked on track to maintain the status quo after member states clashed over oil production policy at an unusual informal gathering before the group’s official meeting in Vienna on Friday.
Saudi Arabia held its line on Thursday, insisting other big producers outside the group such as Russia would have to join any output cuts by the Organization of Petroleum Exporting Countries, according to a person with knowledge of the discussions in a Viennese hotel.
With oil prices hovering near a six-year low, cash-strapped countries including Venezuela, Ecuador and Algeria are pressuring Saudi Arabia to cut production. A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.
The Saudis, the world’s largest oil exporters, have stuck to their one-year-old view that any output cuts won’t work unless big producers outside OPEC, including Russia and Mexico, join. If prices recover sharply, it could revive some U.S. shale production, displacing OPEC crude.
Russia, Mexico and other big producers outside OPEC have given no indication they would agree to any OPEC-led output cuts. Russian Energy Minister Alexander Novak said Thursday that the country doesn’t see a production cut as viable.
Ecuador Oil Minister Carlos Pareja said the pre-meeting -- unusual in recent years and held in a hotel rather than at OPEC’s headquarters -- was "difficult.” “We didn’t manage to reach an agreement yet,” he said.
At the informal gathering in a Viennese hotel, Venezuela tabled a proposal to reduce current production by about 5 percent, the person said, asking not to be identified because the meeting was private. Several other countries backed the proposal, the person said. Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Saudi Arabia didn’t propose a cut.
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