OPEC ended talks without a deal on oil production cuts for the first time in nearly five years as Russia flexed its muscles by so far refusing to commit to the big output curb that Saudi Arabia is demanding, Bloomberg reports.
After two days of talks in Vienna, Saudi Energy Minister Khalid Al-Falih said he isn’t confident of an agreement when the Organization of Petroleum Exporting Countries meets again with its allies on Friday. A proposal for a combined OPEC and non-OPEC cut of 1 million barrels a day was left dangling in uncertainty.
“Not everybody is ready to cut equally,” Al-Falih told reporters in Vienna. “Russia is not ready for a substantial cut.”
The failure to secure a deal yet is the latest example of how OPEC is under pressure from forces that are re-drawing the global oil map, leaving it increasingly dependent on the support of non-member Russia. In a striking development, the U.S. government revealed that it turned into a net exporter of petroleum for the first time in 75 years last week thanks to the shale boom.
The oil market quickly reacted negatively to OPEC’s setback, tumbling as much as 5.2 percent to $58.36 a barrel in London.
As ministers sat down at OPEC headquarters, Russian Energy Minister Alexander Novak flew to St. Petersburg to meet President Vladimir Putin to decide on their country’s contribution. If the group’s most important ally in the OPEC+ alliance decides to make a sizable cut, the cartel would follow up.
“The impression that the group can’t really come to a decision without first checking with Moscow is going to be difficult for some members to swallow,” said Derek Brower, a director at consultant RS Energy Group. “The market won’t care if tomorrow they manage a sizable cut with proper metrics, but that’s still a big if.”
Earlier on Thursday, ministers were discussing a proposal to curb combined OPEC and non-OPEC output by about 1 million barrels a day, said a delegate. That was in line with Saudi Arabia’s preference for a moderate reduction that wouldn’t “shock the market.” The kingdom is under economic pressure after a collapse in oil prices last month, yet it’s seeking to walk a fine line between preventing a surplus next year and appeasing President Donald Trump.