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OPEC seen backing big oil output cut, but awaits Russian support

OPEC seen backing big oil output cut, but awaits Russian support

VIENNA: Organisation of Petroleum Exporting Countries (OPEC) ministers are expected to approve on Thursday the outlines of a deal for a significant cut in oil production to shore up prices hammered by the coronavirus outbreak but they are still waiting for Russia to indicate whether it will back such a move.

Saudi Arabia wants OPEC and its allies, including Russia, to cut 1 million to 1.5 million barrels per day (bpd) for the second quarter and to keep existing cuts of 2.1 million bpd, which expire this month, in place until the end of 2020.

But Riyadh, the biggest producer in the OPEC, and other members of the group has yet to win Russian support for such a deal. So far, Moscow has indicated it would back an extension but not a deeper cut.

Saudi Energy Minister Prince Abdulaziz bin Salman, who met his Russian counterpart Alexander Novak in Vienna on Wednesday, has kept the market guessing about progress in the negotiations.

Asked about prospects for a pact, the Saudi minister informed the reporters “We will have to see today and tomorrow.”

Moscow, which has cooperated on output policy since 2016 in an informal group known as OPEC+, has in the past shown reluctance during negotiations but has signed up at the last minute.

OPEC sources have signalled that preliminary talks with Russia this week in Vienna have been trickier than before.

The slide in oil prices to about $51 a barrel has made it tough for OPEC states to balance their budgets, while Moscow has said it can cope with current prices.

Two OPEC sources said they anticipated that Thursday’s meeting in Vienna of OPEC ministers would go smoothly, with an agreement on a big cut, possibly above 1 million bpd, although a third source said allocating quotas could be tough.