Saudi Arabia, Russia and other members of the OPEC+ group recommended an oil production cut, defying a Twitter plea from President Donald Trump to keep the taps open, but their meeting didn’t agree on how big any reduction should be.
The group secured the participation of Russia for six months of output curbs starting in January, Oman’s Oil Minister Mohammed Al Rumhy told reporters in Vienna as he left the meeting on Wednesday.
The committee didn’t discuss specific numbers and there’s still debate on the scale of the cut that’s needed. Al Rumhy said the group could eventually agree to remove about 1 million barrels a day from the market — just over 1 percent of global output — but a delegate from another country said some members believe a smaller reduction is adequate.
Ministers from the core OPEC group, which doesn’t include Russia, will now meet on Thursday to seek a consensus on exactly who will cut and by how much. While Saudi Arabia, the group’s biggest producer, will shoulder most of the burden, the kingdom wants commitments from other countries before completing a final deal.
The OPEC+ coalition is desperate to shore up oil prices after a slump of more than $20 a barrel since October. But they’re contending with vociferous opposition from the U.S. president, who’s taken to using his Twitter account to berate the group’s policies and sees low oil prices as key to sustaining America’s economic growth.
While ministers met in OPEC’s Vienna headquarters, Trump tweeted that the “world does not want to see, or need, higher oil prices!”
Oil pared gains after the meeting finished to trade at $62.25 on Wednesday afternoon.
“There is little disagreement among OPEC members over the need to cut, but there is not yet consensus over how much,” said Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. “Communicating a large cut, if one can be agreed upon, will still be fraught with challenges given complicated U.S.-Saudi relations.”
Although Russia, the largest producer in OPEC+, agreed to cut in principle, the eventual size of their contribution will be key to putting together the final deal.
In private conversations earlier this week, OPEC delegates said that Russia and Saudi Arabia still differ on how to share the cuts. Saudi Arabia argued that Russian proposals implying a cut by Moscow of as much as 150,000 barrels a day would leave the kingdom shouldering too much of the burden, and insisted there should be a more equal partnership, said people familiar with the talks.
Iran is currently subject to U.S. sanctions and as such won’t participate in any curbs, the country’s OPEC governor Hossein Kazempour Ardebili said this week. U.S. special representative for Iran, Brian Hook, met with Saudi Energy Minister Khalid Al-Falih in Vienna on Wednesday, according to a person familiar with the matter.
The last time the OPEC+ group agreed to curtail output, in late 2016, it settled on a combined 1.8 million-barrel-a-day reduction. In preparatory meetings ahead of this week’s summit, delegates have said a cut of as much as 1.3 million barrels a day next year is needed as demand growth slows and U.S. shale production surges.
“Nobody wants to mention a number, because it means you’re committing yourself to how much you’re going to cut,” said Al Rumhy. “Especially the big boys — they would want to keep this cut very close to their heart.”