Published: Fri, December 07, 2018
Money | By Wilma Wheeler

OPEC members complaining, says Nigeria is overproducing

OPEC members complaining, says Nigeria is overproducing

PRICE Futures Group's Phil Flynn on the outlook for oil prices.

Negotiations between OPEC members are fraught, however, as some feel that Saudi Arabia wields too much clout in setting policy.

However, Saudi Energy Minister Khalid al-Falih told reporters on Thursday morning that a cut of 1 million bpd would be sufficient. More broadly, the slide in USA oil followed a tumble in global stock markets on Tuesday, with investors anxious about the threat of a widespread economic slowdown.

Saudi Arabia sought to persuade Russian Federation on Wednesday to cut oil production substantially with OPEC next year in an attempt to arrest a decline in the price of crude and prevent another global glut.

Iran is now subject to USA sanctions and as such won't participate in any curbs, the country's Oil Minister Bijan Zanganeh said.

Further speaking about Donald Trump's tweet, Al-Falih said that he has full right to share his views using his favourite medium which is Twitter and we take that seriously. In private conversations, delegates said a consensus was emerging around an overall cut, including Russian Federation, of around 1 million barrels a day, although all cautioned the figure wasn't final.

The fall in the price of oil will be a help to many consumers as well as energy-hungry businesses, particularly at a time when global growth is slowing.

Iran's OPEC governor Hossein Kazempour Ardabili said on Tuesday that any meaningful cuts in production must be made by the countries which have pumped above their quotas in breach of a 2007 deal between OPEC and non-OPEC oil producers.

The U.S. sold overseas last week a net 211,000 barrels a day of crude and refined products such as gasoline and diesel, compared to net imports of more than 2 million barrels a day on average so far in 2018, and an annual peak of more than 12 million barrels a day in 2005, according to the U.S. Energy Information Administration.

Oil ministers from 20 or so countries are in Vienna for two days of meetings - first, the 15 members of OPEC, then a wider group including countries outside the cartel.

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day.

"We are becoming the dominant energy power in the world", said Michael Lynch, president of Strategic Energy & Economic Research.

"The stakes are high now for OPEC". Saudi Arabia is the de facto leader of OPEC so its opinion goes a long way, however, due to the critical nature of this decision, it is likely to wait for Russia's opinion which may come later in the day.

Top OPEC producer Saudi Arabia has been leading calls for the group to trim output, amid surging supply and fears that an economic slowdown will erode fuel demand.

OPEC members will also have to contend with Iran. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.

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