Thursday’s much-anticipated OPEC meeting ended without a new deal on production cuts, sending the oil prices tumbling and shockwaves through the petroleum markets.
Saudi Arabia’s oil minister Khalid Al Falih left the meeting in Vienna saying he was “not confident” that the Organization of the Petroleum Exporting Countries would be able to reach a deal with its non-member allies, including Russia, according to news reports. The world’s top oil men will meet again Friday to continue hashing out a deal.
Oil prices took a tumble Thursday, with WTI opening at $51.76 per barrel and closing Thursday at $51.29 per barrel and Brent opening at $60.25 per barrel and closing at $59.73 per barrel. Oil prices have fallen about 30 percent in the last two months, as supply from the United States saturates the oil market yet again.
In this round of negotiations, Libya, Iran and Venezuela are all seeking exemptions from the deal, due to a variety of factors, including economic recessions and sanctions from the United States. In the last Declaration of Cooperation, signed in December 2016, Nigeria and Libya both received exemptions from the production cuts because of economic troubles. Nigeria, however, has largely recovered its production rates and its economic stability.
OPEC’s Economic Commission Board is reporting that they need to cut output by 1.3 million barrels per day to avoid a supply glut and to hopefully restore balance to supply and demand for next year.
But Russia, a critical member of the Declaration of Cooperation, has been less enthusiastic about continued production cuts. The country’s energy minister Alexander Novak has told proponents of the production cuts that the winter weather in Siberia could damage pipelines and other equipment if production is curbed too much.
US President Donald Trump has also been pressuring Saudi Arabia to raise production and lower oil prices, Tweeting on Wednesday ahead of the OPEC meeting: “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”
Saudi Arabia is unusually vulnerable to demands the United States after Saudi journalist Jamal Ahmad Khashoggi was killed in a Saudi consulate in Turkey in October. Trump has backed Saudi Arabia’s Crown Prince Mohammed bin Salman since the killing.