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Sun 30 Oct 2016 09:03 AM

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OPEC officials fail to agree on plan to reduce oil production

High Level Committee of experts will meet again ahead of the next meeting of OPEC ministers to "finalise individual quotas"

OPEC officials fail to agree on plan to reduce oil production
(Alexander Klein/AFP/Getty Images)

OPEC officials meeting in Vienna to work out the details of their plan to reduce oil production failed to reach agreement after hours of talks on Friday, amid objections by Iran which has been reluctant to even freeze its output, OPEC sources said.

The High Level Committee of experts will meet again in Vienna on Nov 25 ahead of the next meeting of OPEC ministers on Nov 30, to "finalise individual quotas", one source said.

They will also meet as scheduled on Saturday with representatives of non-OPEC producers, which OPEC wants help from in curbing supplies.

"Yes, we continue tomorrow with non-OPEC," one of the sources said. "(There was) no complete agreement today since Iran refuses to freeze production."

"We didn't finish all. We are looking to the next meeting on November 25 to finalise individual quotas," another source said.

The meeting of the High Level Committee is comprised mainly of OPEC governors and national representatives - officials who report to their respective ministers.

Talks lasted just over 11 hours on Friday with Iran appearing to be the main sticking point.

"There is no agreement yet, all agree except Iran," one OPEC source said, adding Iran was asking for an exemption.

The Organization of the Petroleum Exporting Countries had agreed last month in Algiers to reduce their production of crude oil to a range of 32.50 million to 33 million barrels per day, OPEC's first output cut since 2008, in an effort to prop up prices.

But from the outset the proposed plan faced potential setbacks with Iraq wanting to be exempt from cuts and countries including Iran, Libya and Nigeria whose output has been hit by sanctions or conflict also wanting to raise their output.

"It is getting complicated," a delegate said before the meeting began on Friday.

"Every day there is a new issue coming up."

However, other OPEC officials including Secretary-General Mohammed Barkindo remained optimistic.

"Our deliberations today, and tomorrow with some non-OPEC producers, could very well have fundamental ramifications for the market, as well as for the medium to long term of the industry," Barkindo said in a speech on the opening day of the two-day meeting, according to a text provided by OPEC.

The committee does not decide policy and will instead make recommendations to the next OPEC ministerial meeting on Nov. 30.

Iraq, OPEC's second-biggest producer, said earlier this week that it would not cut output and should be exempted from any curbs as it needs funds to fight Islamic State.

Meanwhile Iran has insisted on its right to recover market share after Western sanctions were lifted in January.

Non-OPEC nations sending representatives to Saturday's talks are Russia, Kazakhstan, Mexico, Oman, Azerbaijan, Brazil and Bolivia.

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Victory Red 3 years ago

Iraq wants dispensation to pay for costs of fighting ISIS. Nigeria routinely sells more crude than it declares - it is desperate for $$. Iran has plenty of oil, v low cost of production - why would it agree to cutting production at a time when it needs massive investment into its oil sector?

The US is investing in export terminals & pipelines directly from shale oil prod'n sites.

Electric cars / renewables / battery technology all thrown into the mix.

India & China will drive demand as penetration of cars hits the huge middle class.

Oil should never again rise above $60 (index linked). Hedge funds play games with the fundamentals & create volatility but the real story is clear.