Published: Thu, December 06, 2018
Money | By Ralph Mccoy

Trump urges against oil production cut ahead of OPEC meeting

Trump urges against oil production cut ahead of OPEC meeting

When President Trump announced his decision to pull the USA out of the Iran Nuclear Deal and reimpose sanctions on the Islamic Republic, many oil producers ramped-up production over fears of the effects the sanctions would have on trading.

"We're looking for a sufficient cut to balance the market, equally distributed between countries", Al-Falih told reporters ahead of an OPEC meeting in the Austrian capital.

The remarks came just a day prior to OPEC's meeting in Vienna, piling pressure on the Saudi-led cartel, Russian Federation and other non-member nations over potential global oil policy-making.

Russia's TASS news agency quoted an OPEC source as saying OPEC and its allies were discussing the idea of cutting output next year by reverting to production quotas agreed in 2016.

"Markets...believe the production cut deal will be in range of 1-1.3 million bpd", ANZ bank said on Thursday. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.

Russia's second-largest oil producer, Lukoil PJSC, is ready to comply with any request from the Kremlin but hopes output cuts won't be necessary, said Chief Executive Officer Vagit Alekperov.

Hook's meeting with the Saudi minister came as Riyadh has indicated a need for steep reductions in output from January but has come under pressure from US President Donald Trump, who has urged Saudis to refrain from output cuts in order to keep oil prices low.

Those differences persisted after Wednesday's meeting, OPEC delegates said.

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The Trump administration has sought to maintain oil production to avoid a run-up in prices as it tightens sanctions preventing Iran from exporting crude.

On Thursday, Brent futures fell more than 2% as traders began to doubt Opec would deliver a significant cut.

Led by Saudi Arabia, OPEC's crude oil production PRODN-TOTAL has risen by 4.1 per cent since mid-2018, to 33.31 million barrels per day (bpd).

The increase alone is equivalent to the output of major OPEC producer United Arab Emirates.

Iranian exports have plummeted after the United States imposed fresh sanctions on Tehran in November. But Washington gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

The US president tweeted on Wednesday: "Hopefully OPEC will be keeping oil flows as is, not restricted".

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said U.S. crude inventories rose by 5.4 million barrels in the week to Nov 30, to 448 million barrels, in a sign that United States oil markets are in a growing glut.

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