OPEC tentatively agreed an oil-output cut on Dec. 6 but was waiting to hear from non-OPEC heavyweight Russia before deciding the exact volumes for a production reduction aimed at propping up crude prices, two sources from the group said.
Russian Energy Minister Alexander Novak flew home from Vienna earlier for talks with President Vladimir Putin in St Petersburg. Novak returns to the Austrian capital on Friday for discussions among Saudi-led OPEC and the group's allies.
The price of crude has fallen almost a third since October but U.S. President Donald Trump has demanded the Organization of the Petroleum Exporting Countries make oil even cheaper by refraining from output cuts.
"We hope to conclude something by the end of the day tomorrow ... We have to get the non-OPEC countries on board," Saudi Energy Minister Khalid al-Falih told reporters before the OPEC meeting started.
"If everybody is not willing to join and contribute equally, we will wait until they are."
Asked whether OPEC could fail to reach a deal, Falih said all options were on the table. Possible output cuts by OPEC and its allies ranged from 0.5-1.5 million bpd, and 1 million bpd was acceptable, he said.
OPEC's closed-door meeting began around 1100 GMT and was still ongoing after 2-1/2 hours.
Brent oil futures fell as much as 5 percent to below $59 per barrel on fears that there could be no deal but later recovered somewhat, trading down 2 percent by 1325 GMT.
"One million bpd may disappoint many. But should the cut be from a September or October baseline, rather than November, the net impact would be sufficient to limit storage builds," Greg Sharenow, executive vice-president for Pimco, said on the sidelines of the OPEC meeting.
"It is unlikely to spark a meaningful price rally, but also will not be so dire either. In many respects it is the middle road, which may be the optimal solution," said Sharenow, who helps manage a $15 billion commodities fund at the $1.77 trillion U.S. investment management firm.
OPEC delegates have said the group and its allies could cut by 1 million bpd if Russia contributed 150,000 bbl/d of that reduction. If Russia contributed around 250,000 bbl/d, the overall cut could exceed 1.3 MMbbl/d.
Novak said on Thursday that Russia would find it harder to cut oil output in winter than other producers because of the cold weather.
Oil prices have crashed as Saudi Arabia, Russia and the United Arab Emirates raised output since June after Trump called for higher production to offset lower exports from Iran, OPEC's third-largest producer.
Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry.
Iranian exports have plummeted after the United States imposed fresh sanctions on Tehran in November. But Washington gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.
"Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!" Trump wrote in a tweet on Dec. 5.
Iranian Oil Minister Bijan Zanganeh said on Thursday he would support a cut as long as Iran did not need to reduce its own output. Iraqi Oil Minister Thamer Ghadhban said Iraq as OPEC's second-largest producer would support and join a cut.
Possibly complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.
Recommended Reading
Liberty Energy CEO: NatGas is Here to Stay as Energy Transition Lags
2024-03-27 - The energy transition hasn’t really begun given record levels of global demand for oil, natural gas and coal, Liberty Energy Chairman and CEO Chris Wright said during the DUG GAS+ Conference and Expo.
Natural Gas Producers’ Game Plan for LNG: Wait Out 2024
2024-01-08 - Natural gas production has risen over the past decade with the potential to keep growing, but 2024 will test the market’s patience as E&Ps await LNG export capacity to come online.
US Expected to Supply 30% of LNG Demand by 2030
2024-02-23 - Shell expects the U.S. to meet around 30% of total global LNG demand by 2030, although reliance on four key basins could create midstream constraints, the energy giant revealed in its “Shell LNG Outlook 2024.”
Global Oil Demand to Grow by 1.9 MMbbl/d in 2024, Says Wood Mac
2024-02-29 - Oil prices have found support this year from rising geopolitical tensions including attacks by the Iran-aligned Houthi group on Red Sea shipping.
Tinker Associates CEO on Why US Won’t Lead on Oil, Gas
2024-02-13 - The U.S. will not lead crude oil and natural gas production as the shale curve flattens, Tinker Energy Associates CEO Scott Tinker told Hart Energy on the sidelines of NAPE in Houston.