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OPEC+ to continue talks on 2019 oil production, Russia may agree to ‘symbolic’ cuts

Russia has so far failed to support Saudi Arabia’s proposal to reduce oil production by at least 1 million barrels per day

VIENNA, December 5. /TASS/. States parties to the OPEC+ deal on oil production cuts between the Organization of the Petroleum Exporting Countries (OPEC) and non-member oil producing states have so far been unable to reach consensus and will continue their discussions in Vienna on Wednesday.

The six-member OPEC+ ministerial monitoring committee, led by Russia and Saudi Arabia and also comprising Kuwait, Venezuela, Algeria and Oman, will convene on Wednesday in the Austrian capital. It is to provide OPEC with recommendations on oil output reduction in the coming months. A source in one of delegations earlier told TASS that the OPEC+ Technical Committee, which met in Vienna on Monday, was unable to make a recommendation to the Joint Ministerial Monitoring Committee regarding oil production cuts.

"Not yet, but we will continue the negotiations tomorrow afternoon," Kuwait Oil Minister Bakheet Al-Rashidi said, answering to a reporter’s question.

He also expressed hope that Russia would eventually agree to cut its oil production.

Meanwhile, a high-ranking source in a Middle Eastern delegation told TASS that even a "symbolic" cut by Russia would be sufficient for reaching a general agreement.

"It’s ok if Russia wants to cut [oil production] only as a symbolic gesture," the source said. "No one demands that Russia cut its own throat. The figure of 1.3 million barrels is just a number, and nothing more," the source said on the condition of anonymity.

"Everything we need is to end the meeting on a positive note," the source continued. "At the same time, Russia can gradually trim its oil production to the required level, as it did last time. No objections to that."

According to the source, although the agreement may enter force on January 1, 2019, Middle Eastern countries are unlikely to take practical measures to reduce their oil output before March, because many of them have already signed contracts for deliveries in January and February.

"We want to find an agreement that would look like a cut. And we want it to satisfy everyone: those who are reluctant to reduce their output and those who are ready to do so. And if we manage to find such a mechanism, it will be good for everyone," he said.

The discussion in Vienna, to take place on December 5-7, is expected to be tough as Russia and Saudi Arabia still have not yet reached a consensus on oil production cuts in 2019. However, according to analysts, oil exporting nations will have to trim their crude output to avert the scenario of the 2014 market plunge.

Russia, together with Saudi Arabia, plays a key role in the OPEC+ agreement. Earlier Bloomberg reported with reference to anonymous sources that Russia was ready to reduce output by around 150,000 barrels per day next year. According to TASS sources, the Russian Energy Ministry and Russian oil companies earlier agreed on "purely symbolic" cuts.

The two nations signed to the biggest oil output reduction commitments during the first round in 2017. Last summer, they had to make an u-turn and started to boost oil extraction to compensate for a possible market deficit caused by falling production in Iran and Venezuela.

However, oil production in Iran and Venezuela has been on the increase in the past six months. Besides, Washington’s anti-Iran sanctions turned out to be not as strict as expected and the US virtually allowed Tehran to export crude to its biggest buyers, India and China, as well as to other Asian and European countries. Therefore, the market is now facing oversupplies rather than deficit.

In addition, Iran earlier announced that it was not going to reduce its oil production. Iran’s OPEC governor, Hossein Kazempour Ardebili, told Reuters on Monday that OPEC members who had earlier increased their output should now take the lead on cuts.

However, Russia has so far failed to support Saudi Arabia’s proposal to reduce oil production by at least 1 million barrels per day.

The talks in Vienna will continue on December 6, when OPEC ministers will sit at the negotiating table to consider the monitoring committee’s proposals and possibly approve them. Finally, non-member nations who are parties to the OPEC+ deal, will join the cartel for discussions on December 7.

For the two years of the OPEC+ format’s existence, verdicts of ministerial meetings have always mirrored those proposed by the monitoring committee.