As cracks emerge in global oil pact, Saudis may need to compromise

Thu Oct 27, 2016 9:35am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Rania El Gamal

DUBAI (Reuters) - Tough negotiations await a group of OPEC experts as they meet their counterparts from other oil producers such as Russia on Oct. 28-29 to hammer out details of an output-capping agreement, with disagreements threatening to scupper the deal.

OPEC agreed in Algeria last month on a modest oil-production cut in the first such pact since 2008, with the group's top producer Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.

But cracks have surfaced in the Algiers agreement, which would reduce output to a range of 32.5-33 million barrels per day (bpd), and Saudi Arabia may have to offer a major concession if it wants to cement the accord.

Saudi Arabia and its Gulf OPEC allies are already willing to cut 4 percent from their peak oil output, energy ministers from the Gulf countries told their Russian counterpart this week, sources familiar with the matter told Reuters.

Iraq, OPEC's No. 2 producer, said this week that it would not cut output and should be exempted from any curbs as it needs funds to fight Islamic State. Baghdad's stance is likely to face opposition from Riyadh and its Gulf allies, OPEC sources said.

"I expect it to be a very tough meeting," one OPEC source said of the expert talks in Vienna.

"If there is a cut, then everyone must cut. No exemptions," the source said, commenting on Iraq's demands.

There is a general understanding that only Libya, Nigeria and Iran should be exempt as their output had been hit by wars and sanctions, three OPEC sources said.   Continued...

 
A gas flame is seen in the desert near the Khurais oilfield, Saudi Arabia June 23, 2008. REUTERS/Ali Jarekji/File Photo