A deal to secure the cooperation of other major suppliers was prevented by OPEC’s internal disagreements over how to implement oil-supply cuts agreed last month.
Little more than a promise that the world’s largest oil producers would keep on talking was yielded after more than 18 hours of talks over two days in Vienna. Just days before the Organization of Petroleum Exporting Countries are supposed to finalize the accord that lifted oil prices to one-year highs, discussions will continue in late November.
Brazil’s Oil and Gas Secretary Marcio Felix said after the meeting without making any supply commitments, the non-OPEC nations ended talks with the group on Saturday. Azerbaijan’s Energy Minister Natiq Aliyev said that Iran and Iraq, two nations that are more interested in increasing production than reducing it, is crucial to the the outcome of the process.
Kazakhstan’s Deputy Energy Minister Magzum Mirzagaliyev said in an interview after the meeting that oil-producing nations need to continue dialog and “come up with real numbers” before cuts can begin even while Saturday’s meeting was a successful “first step”.
An impasse over the role of Iran and Iraq, both of which want to be exempt from any cuts, was the conclusion during internal OPEC talks on Friday and hence a deal wasn’t possible. While non-member Oman couldn’t commit to a specific output cut until OPEC had its own agreement, it said that it was willing to cooperate in a supply deal.
A serious dent would happen in a record oil surplus if producers outside the group join in due to OPEC’s surprise agreement in Algiers to make the first supply cuts in eight years.
Oil prices have subsequently fallen as several members disputed the production estimates that would determine the size of cuts after the accord helped push oil prices to a 15-month high above $50 a barrel earlier this month. The organization’s top official warned that failure to implement last month’s accord will hurt oil producers.
Compared with about 33.4 million in September, the output was agreed to by reduce output to a range of 32.5 million to 33 million barrels a day by OPEC in the Algerian capital on Sept. 28. The details of how those supply curbs would be shared were the intention of Friday’s meeting of technical experts from members of the group. Talks with non-OPEC nations on Saturday sought to seek wider participation in cuts.
One delegate, who asked not to be identified because the meeting was private said that none of the countries that attended Friday’s meeting specified how much they are willing to cut. The delegate said that the methodology to be used for allocating individual production curbs was progressed upon.
Two participants said that no concrete output limits for non-OPEC countries were discussed on Saturday. Differences between nations’ own oil-production data and sources used in OPEC’s own estimates, which have been disputed by members including Iran, Iraq and Venezuela were discussed in the meeting.
Russia said that only if there is an internal OPEC agreement first, it is willing to freeze production, rather than cut. Pumping at a post-Soviet record of about 11.1 million barrels a day is being done by the largest producer outside OPEC.
(Adapted from Bloomberg)