VIENNA — OPEC countries hoping to support the price of oil put off their decision Thursday on how much to reduce oil production until they negotiate with ally Russia on Friday on how much it will contribute to the cut.
Some saw it as a sign that the group of oil-producing nations may not have the political unity to rein in supply and is suffering under political pressure from U.S. President Donald Trump to not push prices up again. Others interpreted it as a tactic to get Russia to agree to big cuts as well.
The price of oil has fallen about 25 percent because major producers — including the U.S. — are pumping oil at high rates. It fell further on Thursday after OPEC’s lack of action and amid broader concerns about global economic growth.
Saudi Arabia, the heavyweight within OPEC, said Thursday it was in favor of a cut of about a million barrels a day.
But upon leaving the meeting, Saudi oil minister Khalid Al-Falih said “we’re still deliberating.” He said the OPEC countries were still discussing the distribution of the cuts between them.
Iran, Saudi’s regional rival and fellow OPEC member, has resisted any notion of cutting its output as its crude exports are being pinched already by U.S. sanctions. It has wanted an exemption.
The OPEC countries will now discuss the meeting with Russia, which is not part of OPEC but has been coordinating its output levels to support the market.
Al-Falih said a decision would take all day Friday.
“I’m not confident,” he added.
Some experts saw that as a tactical move by OPEC countries to not announce a production level as they prepare to ask Russia and several other smaller non-OPEC countries to also cut their output.
“If they would, then (Russia and others) could adjust their negotiation strategy,” said Jan Edelmann, analyst at HSH Nordbank.
Whatever the logic, the lack of clarity put another dent in the price of oil. The international benchmark, Brent, was down $2.20 at $59.36 a barrel on a day when stock markets also fell sharply around the world.
The fall in the price of oil will be a help to many consumers as well as energy-hungry businesses, particularly at a time when global growth is slowing. And Trump has been putting pressure publicly on OPEC to not cut production. He tweeted Wednesday that “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”
While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump’s decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi. U.S. Senators say, after a briefing with intelligence services, that they are convinced that Saudi’s de-facto ruler, Crown Prince Mohammed bin Salman , was involved in Khashoggi’s death. Some experts say that gives the U.S. some leverage over the Saudis, though Al-Falih denied that on Thursday.
When asked if the Saudis had permission from Trump to cut production, Al-Falih replied: “I don’t need permission from any foreign governments.”
Experts say this week’s meetings of the Organization of the Petroleum Exporting Countries will influence the price of oil over the coming months. How strongly it does so could depend on Russia’s contribution.
Analysts estimate that if Russia is willing to step up its production cuts, OPEC and non-OPEC countries could trim production by a combined 1.3-1.4 million barrels a day. A cut of 1 million barrels would be the minimum to support the market, and anything less could see the price of oil fall another $10 a barrel, according to Neil Wilson, chief market analyst at Markets.com.
“The cartel has to go above and beyond the 1 million barrels cut, to at least 1.4 million to really steady the ship,” said Wilson. “The stakes are high now for OPEC.”
OPEC’s reliance on non-members like Russia highlights the cartel’s waning influence in oil markets, which it had dominated for decades. The OPEC-Russia alliance was made necessary in 2016 to compete with the United States’ vastly increased production of oil in recent years. By some estimates, the U.S. this year became the world’s top crude producer.
OPEC is also riven by internal conflict, particularly the rivalry between Saudi Arabia and Iran. Meanwhile, Qatar, a Saudi rival and Iranian ally, said this week it would leave OPEC in January. While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.