Keep Oil Flowing, Says Trump Ahead Of Oil-Exporting Nations' Group Meet

Oil prices skid amid global stock market slump, swelling US supply

Oil prices skid amid global stock market slump, swelling US supply

The producer group's de facto leader, Saudi Arabia, has indicated a need for steep reductions in output from January but has come under pressure from US President Donald Trump to push oil prices lower.

Such a move would mean cutting production by more than 1 million bpd.

When President Trump announced his decision to pull the USA out of the Iran Nuclear Deal and reimpose sanctions on the Islamic Republic, many oil producers ramped-up production over fears of the effects the sanctions would have on trading.

The group secured the participation of Russian Federation 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.

Two OPEC delegates said Russian Energy Minister Alexander Novak was flying back to Moscow on Wednesday to get a final agreement from President Vladimir Putin.

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years.

Oil prices have fallen by nearly a third since October to around $62 per barrel after Saudi Arabia raised production to make up for the drop in Iranian exports.

Oil prices skid amid global stock market slump, swelling US supply

The production surge took place in the run-up to Trump's pledge to sanction Iran's oil sector on November 4 and later decide to give waivers to some customers.

The uncertainty over possible production cuts caused oil prices to dip on Wednesday as investors wait on a decision.

"How can the Saudis cut substantially if Trump doesn't want a big cut?" said Gary Ross, chief executive of US -based Black Gold Investors and a veteran OPEC watcher.

"I think the likelihood is that they will cut crude production rate, maybe not as dramatically as some people would like, to try and meet a balance between what the US would like and their own personal interests. They'd like to see lower gasoline prices at the pumps, because that's important for votes in the United States." . "Communicating a large cut, if one can be agreed upon, will still be fraught with challenges given complicated U.S. -Saudi relations".

Bob McNally, president of USA -based Rapidan Energy Group, said OPEC was stuck between a rock and a hard place given pressure from Trump on one hand and the need for higher revenues on the other.

During Thursday's meeting, OPEC leaders are expected to discuss how to stabilize crude oil production after USA prices plunged by 22-percent in November - making it the worst month since the financial crisis in 2008. "It won't be called a cut but will effectively mean a cut, which will also be hard to quantify", McNally said.

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