OPEC ended a meeting on Thursday without striking a deal to reduce oil output and without any clear sign one would be reached when officials from the organization, Russia and other oil producers reconvene Friday, The New York Times reported.
Saudi Arabia’s energy minister, Khalid al-Falih, told reporters he was “not confident” an agreement that would keep supply and demand in balance was within reach.
Falih had said in the morning that “all options” were on the table, but that a reduction of one million barrels a day, roughly 1 percent of the global oil supply, would be “adequate” to balance the markets. One million barrels a day would likely be considered a modest cut by traders. He said he had heard a range of numbers discussed, from 500,000 to 1.5 million barrels a day.
Ann-Louise Hittle, an analyst at the market research firm Wood Mackenzie, said that it was not surprising for the group to fall short of a deal on its first day of meeting. “They faced a lot of complicated issues,” she said.
Falih, whose country represents 12 percent of global oil output, said he had met with the American special envoy Brian Hook on Wednesday. He said Hook had “refrained” from asking the Saudis not to cut production, but quickly added, “I don’t need permission to cut.”
On one hand, the world is widely viewed as having an oil glut substantial enough to justify a cut in production. Such a move would prop up prices, which have tumbled since reaching about $76 a barrel for West Texas intermediate crude, the American benchmark, in early October. Prices fell again Thursday. West Texas crude dipped more than 3 percent, to $51.26 a barrel. Brent crude, the international benchmark, dropped about 3.5 percent, to $59.40, The Times notes.
As low as prices have gotten, President Trump is pressing OPEC, and Saudi Arabia in particular, to maintain production levels to keep them down for American consumers. Trump used Twitter on Wednesday to show that he was paying attention to the talks.
The President’s attempts to intervene in OPEC deliberations create a quandary for the Saudis, whose role in setting production levels and influencing the markets makes them key decision makers at OPEC.
“The Saudis have many constituencies to please, some of them contradictory,” said Roger Diwan, a vice president for oil market strategy at the research firm IHS Markit. “The tweeting takes away their ability to communicate effectively.”
President Trump is pressing OPEC, and Saudi Arabia in particular, to maintain production levels to keep prices low for American consumers. In normal times, analysts said, there would be little hesitation to cut supplies. But these are not normal times.
“This is one of the strangest OPEC meetings I can remember,” Jim Krane, an energy fellow at the Baker Institute at Rice University said on Wednesday. “Balancing the oil market is taking a back seat to political intrigues involving Saudi Arabia and Donald Trump.”
“It’s like there’s a Trump-caricature Thanksgiving parade balloon hanging outside OPEC headquarters,” he added.
Tensions are also emerging within OPEC. Qatar, which has long been part of a bloc of Gulf Arab states supporting the Saudis, said on Monday that it would leave the oil cartel next year to focus on developing natural gas. It hinted that the decision was motivated partly by frustration over the Saudis’ dominance of oil policy, the Times adds.