Published: Thu, December 06, 2018
Economy | By

Saudi Arabia works on convincing Russian Federation to join oil cuts

Saudi Arabia works on convincing Russian Federation to join oil cuts

The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry.

Saudi Arabia sought to persuade Russian Federation on Wednesday to cut oil production substantially with OPEC next year in an attempt to arrest a decline in the price of crude and prevent another global glut.

The move would mean reducing production by more than 1 million bpd.

The Organization of the Petroleum Exporting Countries and its allies continued to haggle over the size of potential crude-production cuts in Vienna on Wednesday.

Over the past month, U.S. President Donald Trump has expressed hopes that OPEC would not cut production, then sent out a thank-you-Saudi Arabia tweet and urged for even lower oil prices, while basically declining to blame Saudi Arabia and its Crown Prince Mohammed bin Salman for the murder of Jamal Khashoggi.

OPEC meets on Thursday in Vienna, followed by talks with allies such as Russian Federation on Friday.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years.

When President Trump announced his decision to pull the US 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.

Oil prices skid amid global stock market slump, swelling US supply

Oil prices have fallen by nearly a third since October to around $62 per barrel after Saudi Arabia raised production to make up for the drop in Iranian exports.

"Hopefully, OPEC will be keeping oil flows as is, not restricted".

Iran is suffering both as a result of lower prices and a decline in its oil exports because of the USA sanctions.

However, when oil producers realized the sanctions fell far short of what had been expected, fears of oversupply followed. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh. Trump said on Twitter.

On the eve of the OPEC meeting, the senior USA official overseeing sanctions on Iran made a rare foray into the group's home turf, for a discreet Viennese breakfast with the cartel's most powerful member. "They'd like to see lower gasoline prices at the pumps, because that's important for votes in the United States." .

The Nopec legislation being discussed by USA lawmakers could make it possible to sue Saudi Arabia and other OPEC members for price fixing.

"If Mr. Hook has come to Vienna to apply for USA membership in OPEC, and this is the reason why he meets OPEC members, the request can be reviewed", Zanganeh told SHANA.

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