Sun, Nov 27, 2016 page16

• Saudi Arabia exits talks to trim oil output

  ‘LEAVE IT TO LATER’: One analyst said a deal reached in September was unclear, leaving OPEC leaders unable to reach an agreement with non-OPEC members

  • Bloomberg
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  Saudi Arabia pulled out of planned talks with non-OPEC nations including Russia as disagreements about how to share the burden of supply cuts stood in the way of a deal to boost prices just days before a make-or-break meeting in Vienna.

  OPEC officials were scheduled to meet with nonmembers tomorrow before a ministerial meeting in Vienna on Wednesday. The meeting was canceled after Saudi Arabia decided not to take part.

  Instead, the group called another internal meeting to try to resolve its own differences, particularly the question of whether Iran and Iraq are willing to cut production, said two delegates, who asked not to be identified because the deliberations are sensitive.

  Saudi Arabia wants an OPEC deal in place before conversations with other producers such as Russia, one delegate said.

  The setback suggests that Saudi Arabia remains split from its two biggest Middle Eastern OPEC rivals. Iran insists it should be allowed to restore output to pre-sanctions levels, while it remains unclear if Iraq is still disputing the OPEC supply estimates that would provide the basis for any cuts.

  With less than a week until the crucial ministerial meeting, the refusal of just one major producer to participate could scuttle the whole of the agreement reached in September in Algiers.

  “The whole Algerian deal wasn’t clear from beginning and their approach was ‘leave it to later,’” said Abdulsamad al-Awadhi, a former OPEC official for Kuwait who is now an independent analyst in London.

  Two months after the initial accord, “OPEC leaders are confused and the group’s founding members can’t solve differences, but they want to have a deal with non-OPEC. This is a tough call,” al-Awadhi added.

  Brent fell 3.6 percent to US$47.24 per barrel in London on Friday. In New York, West Texas Intermediate fell to US$46.06 per barrel.

  In late September, OPEC agreed to the outline of its first production curbs since the global financial crisis in 2008. Since then, the group has spent two months trying to agree how to share the cuts, which would bring its production to between 32.5 million and 33 million barrels per day.

  OPEC estimated that it pumped 33.6 million barrels per day last month.

  Technical experts from member countries met in Vienna this week to finalize the details of the cuts. After two days of meetings, the talks concluded without resolving the issue of Iran and Iraq, instead deferring the matter to ministerial talks on Wednesday.

  Those officials are to reconvene tomorrow in an effort to overcome the impasse, two delegates said.

  Ministers from Saudi Arabia and Iran are not scheduled to arrive in Vienna until Tuesday, OPEC delegates said, leaving little time for them to hold negotiations before the big meeting.

  Without an OPEC deal, the International Energy Agency predicted that next year would be the fourth consecutive year in which supply runs ahead of demand, potentially causing lower prices.
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