Russia may be ready to cut its oil production by 200,000 bpd as part of a deal with OPEC to reduce oil supply—a higher commitment than 150,000 bpd previously aired, a source at Russia’s energy ministry told Reuters on Friday, as the deal broker of the tedious negotiations, Russian Energy Minister Alexander Novak, is now in the house.
In the past few days, Russia was said to be willing to cut up to 150,000 bpd, much lower than Saudi Arabia’s ask for around 250,000 bpd.
On Thursday, Novak said that it was much more difficult for Russia to cut its oil production in the winter.
The talks within OPEC only, which adjourned with a stalemate on Thursday without any agreement, due to wrangling about exemptions and how to divvy up the cuts, resumed on Friday with Iran still holding firm that it would not be reducing its production in any circumstances while it is under U.S. sanctions.
Then, Russia’s Novak, who arrived in Vienna today, held a meeting with Iran’s Oil Minister Bijan Zangeneh, presumably to try to soften Iran’s firm stance and find a middle ground, offering a ‘symbolic cut’, according to reports.
As of 7:00 a.m. EDT on Friday, OPEC delegates were telling reporters at OPEC’s headquarters in Vienna that the OPEC talks are deadlocked, with Iran not accepting any cut, ‘symbolic’ or not, and insists on exemption in any OPEC deal.
Saudi Arabia’s Energy Minister Khalid al-Falih and Novak were also holding a two-way meeting, while the cartel has not yet reached any deal on the size of the OPEC cuts and exemptions and on the position of Iran, which continues to refuse to accept wording ‘cut’ and insists on ‘exemption’. According to OPEC delegates, Iran is now the only sticking point in the OPEC talks.
After al-Falih meets with Novak, he may have a new proposal of the size of the cuts within OPEC, depending on how much Russia may be willing to commit.
At any rate, the report that Russia may have accepted a higher-than-previously floated cut pushed Brent Crude up 0.47 percent to $60.34 and WTI Crude up 0.10 percent at $51.44 at 7:23 a.m. EDT, following Thursday’s 3-percent slide.
By Tsvetana Paraskova for Oilprice.com
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