Saudi Arabia has sent panic attacks down the spines of oil stakeholders after saying it may not attend the cut meeting between OPEC and non-OPEC countries scheduled to hold today in Vienna, Austria
Instead, Saudi Arabia wants OPEC members to agree on a deal before meeting with non-OPEC producers.
This move by SA has signaled that the details of any non-OPEC support, if any is to be had at all, will not be straightened out until after the meeting on 30 November.
It also may mean that Saudi Arabia finds any non-OPEC talks pointless without having their own issues sorted out.
The oil market is already reacting to Saudis shun, sending price crashing further. Brent fell 3.6 percent to $47.24 a barrel in London on Friday. In New York, West Texas Intermediate fell to $46.06 a barrel.
Already, Russia is getting cold feet. Russia in the past had agreed to cut production if OPEC first agreed on a deal amongst themselves. Now Russia says it will only freeze production at present level and not cut.
Without Saudi Arabia in attendance, OPEC and non-OPEC nations are scheduled to meet today, November 28, just two days before the OPEC ministerial meeting on November 30. Many are hoping that this meeting will finalise the production cuts plan to boost crude oil prices.
“Since OPEC has not reached agreement there is no need to have a meeting with non-OPEC. If these problems are still ongoing what is the point of meeting?” the Financial Times reported on Friday, quoting a person familiar with the Saudi oil policy.
This week, OPEC will discuss a cut by all members except Nigeria and Libya—a plan which will cut between 4 percent and 4.5 percent of their output, Reuters reported earlier this week, quoting OPEC sources.
However, Iran and Iraq continue to be the stumbling blocks to a deal, demanding special treatment because of sanctions and the war on Islamic State, and disputing OPEC’s secondary sources data which puts their respective production lower by a couple of hundred thousand barrels per day.
Iraq stunned the markets just a day after reports of the 4-4.5 percent cut circulated. Baghdad signaled that it may be willing to cut, because whatever it could lose with lower production, it would gain with higher oil revenues.
Saudi Arabia’s refusal to attend the meeting with non-OPEC producers until an all-OPEC deal is first agreed upon, may also be viewed as a statement about how fed up Saudi Arabia is with Iran and Iraq stubbornness.
On Friday, the oil minister of Azerbaijan, Natig Aliyev, was quoted as saying the cartel may demand cuts from non-OPEC nations too, and may want non-OPEC producers to cut production by as much as 880,000 bpd.
Russia, which has said it supports a freeze but has never spoken or backed cuts to its own production, floated the concept of a ‘pro-forma’ cut, saying that by keeping its production fixed, it would be an effective ‘cut’ to its 2017 production plan.
The Organization of the Petroleum Exporting Countries is trying to cement a preliminary September agreement in Algeria that would reduce its production to between 32.5 million and 33 million barrels per day, its first supply curb since 2008.
OPEC wants to remove a supply glut and increase oil prices, which at below $48 a barrel are less than half their level of mid-2014.
A similar OPEC and non-OPEC meeting in October resulted in no specific pledges from outside producers to cut output, with attendees citing the lack of an internal OPEC agreement.
OPEC’s Economic Commission Board, comprised of the national representatives of the 14 member countries who report to their respective oil ministers, concluded a two-day meeting at the group’s Vienna headquarters on Thursday.
Ahead of Wednesday’s OPEC meeting, ministers are still trying to find agreement.
“We have held lengthy discussions with our counterparts about practical questions and we remain optimistic that the Vienna meeting will consolidate the historic agreement obtained in Algiers,” Algerian Energy Minister Nouredine Bouterfa told state news agency APS, referring to the talks in September that yielded a preliminary deal.
“The whole Algerian deal wasn’t clear from beginning and their approach was ‘leave it to later’,” said Abdulsamad al-Awadhi, a former OPEC official for Kuwait who is now an independent analyst in London.


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