Russia key to OPEC 2019 production cut decision
Cut will be between 1mn and 1.3mn bpd, depending on Russia's contribution
OPEC delegates told Reuters that the organisation was waiting to hear from Russian Energy Minister Alexander Novak on production cuts. He reportedly flew back to Russia from Vienna to potentially meet President Vladimir Putin, and will return to the Vienna talks on Friday.
OPEC is slated to talk with its allies on Friday, after member-only discussions on Thursday. Delegates told Reuters that cuts would depend on Russia's contribution.
"The cut will be between 1.0 and 1.3mn bpd," one delegate told Reuters. "We just have to see how it will be distributed."
If Russia contributes 150,000 bpd to the production cuts, delegates said OPEC could cut output by 1mn bpd. If it contributes closer to 250,000 bpd reduction, the cut could exceed 1.3mn bpd. Novak noted that Russia might have difficulty cutting output due to its cold winter.
Suhail Mohamed Al Mazrouei, UAE minister of energy and industry, and president of the OPEC Conference, gave opening remarks at the 175th OPEC Conference, looking back at 2018 and forward to 2019 ahead of closed-door talks to agree on output for next year.
"We have witnessed positive progress on removing the inventory overhang, the market has seen further rebalancing and there has been excellent collaboration between OPEC and non-OPEC participants in the ‘Declaration of Cooperation’," Al Mazrouei said. He noted that OPEC and its allies served "the interests of consumers, producers, the industry and the global economy at large" by pursuing a balanced, sustainable oil market.
He also noted that the organisation's work was not done. "As we look forward to 2019, we see a new set of challenges," Al Mazrouei added. "This includes the general consensus that prospects point to higher supply growth than expected global requirements and there are signs of a potential slowdown in demand.
"Today, it is vital that we thoroughly examine the potential gap between supply and demand in 2019, and how this might impact inventory levels and the extremely ‘hard won’ market balance we have achieved over the past two years."
He said this required a shift from OPEC's strategy in June 2018, which saw increased production from the organisation and its allies.
"It is essential that we look to move ahead with a more permanent relationship with our non-OPEC producers, in order to continuously adapt to ongoing market dynamics, and to help meet the challenges, as well as opportunities, that we will face in the months and years ahead," he said.