Russian Energy Minister Alexander Novak spoke of a proposal to cut oil production further to keep crude prices from falling too far (JOE KLAMAR)

Vienna (AFP) – OPEC countries were to meet again here Friday after they failed to agree on output cuts that could stem price pressure from abundant reserves and weak global economic growth.

Saudi and Venezuelan oil ministers voiced confidence that the 14-member Organization of the Petroleum Exporting Countries would strike deals on an overall output level and each member’s share. 

OPEC countries have been mulling and additional cut that would go beyond their agreement to reduce output by 1.2 million barrels per day from October 2018 levels.

That deal was originally fixed in December last year, was extended at OPEC’s last meeting in July, and is due to expire in March 2020.

On Thursday, Russian Energy Minister Alexander Novak said a preliminary gathering of ministers had recommended an additional cut of 500,000 barrels per day be considered for the first quarter of 2020.

Novak added that level could be re-examined during an “extraordinary meeting” in March.

His remarks did not affect oil prices significantly however, because markets considered it “more of a housekeeping move that will narrow the gap between (producers’) current target and the overcompliance we have seen from the alliance,” Oanda analyst Edward Moya told AFP.

Saudi Arabia has voluntarily pumped below the quota it was assigned under the current deal even while other producers — including Russia — have been exceeding theirs.

Friday’s meeting was set to finalise details of an agreement between Russia and other countries that allied themselves with OPEC three years ago to face the challenge of increased US production.

Ministers were unusually tight-lipped as they filed out of Thursday’s meeting in Vienna.

Attending his first OPEC meeting as Saudi oil minister, Prince Abdulaziz bin Salman gave no indication of where he stood on the proposal for more cuts.

– Compliance? –

Without Saudi Arabia, the world leading oil exporter, no decision is likely to be adopted.

It has accounted for most of the output cuts and is irritated by the failure of countries such as Iraq, Nigeria and Russia, which is the number two global producer, to respect their quotas.

If OPEC and its allies are to effectively tighten supplies, there are “still lots of details to be ironed out on how that might be apportioned,” Argus Media analyst David Fyfe told AFP.

“The extent to which it represents real cuts and/or improved compliance” was also unclear, he added.

Niel Wilson at Markets.com added: “We’ll wait to see if any arm-twisting by the Saudis forces Iraq and Nigeria into complying -– but why would they bother now when they’ve not complied thus far?”

Saudi Arabia in particular has an interest in underpinning crude prices in the wake of its initial public offer (IPO) of shares in state-owned oil giant Aramco.

The group, which alone accounts for around 10 percent of the world’s crude oil, said Thursday it had raised $25.6 billion in the world’s biggest stock sale ever.

The IPO puts Aramco’s total value at $1.7 trillion, well above number two Apple at $1.2 trillion.

“We shall see where the shares head on day one,” Wilson remarked.

Despite the glitzy headlines, OPEC remains under pressure from factors that include a trade war that has curbed the oil-thirsty Chinese economy, and weak activity across Europe.

Meanwhile, oil production in the United States, which became the world’s biggest producer in 2018, Brazil and Canada are at record levels, and Norway plans to increase its production as well.

Oil prices have nonetheless remained steady since OPEC’s meeting in July, hovering around $60 a barrel for the European benchmark Brent crude. 

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.