Published: Thu, December 06, 2018
Finance | By Loren Pratt

Trump asks OPEC not to cut production

Trump asks OPEC not to cut production

The slide in U.S. oil followed a tumble in global stock markets on Tuesday and Wednesday, with investors anxious about the threat of a widespread economic slowdown.

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.

Saudi Arabia has indicated it wants the Organization of the Petroleum Exporting Countries and its allies to cut output by at least 1.3 million barrels per day, or 1.3 percent of global production.

Oil prices fell 1% on Wednesday, weighed down by swelling United States (US) inventories and a plunge in global stock markets as China's government warned of increasing economic headwinds.

President Trump is pressuring OPEC to increase oil production as members of the organization are set to meet in Vienna on Thursday. While Saudi Arabia, the group's biggest producer, will shoulder most of the burden, the kingdom wants commitments from other countries before completing a final deal. "How OPEC communicates this to the market may be just as important as what gets done".

In private conversations earlier this week, OPEC delegates said that Saudi Arabia had favored a Russian cut of about 300,000 barrels a day, but Moscow was seeking a smaller reduction of about 150,000, said people familiar with those talks.


Major producers such as Russia, Saudi Arabia, Iraq, the UAE and Kuwait pounced on the occasion to produce as much oil as they could, anticipating a steep drop in Iran's exports which did not happen. Those differences persisted after Wednesday's meeting, OPEC delegates said. Trump said on Twitter.

"I hope that maybe these measures won't be necessary", he said in an interview with Bloomberg television in Vienna.

The meetings are expected to be focused on a deal to reduce output, but Iran's OPEC governor Hossein Kazempour Ardabili believes an agreement is unlikely to be reached.

Russia's TASS news agency reported on Wednesday that OPEC and its partners may return production quotas to 2016 levels by reducing oil production by more than 1 million barrels per day.

After the USA granted waivers to eight of Iran's key oil buyers to continue importing Iranian oil at reduced volumes at least until early May 2019, Saudi Arabia and other OPEC members, as well as their key partner in the non-OPEC group, Russia, are now considering a new cut and a U-turn from their pump-to-compensate-for-Iran policy that started in June.

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