VIENNA: Saudi Arabia sought to persuade Russia on Wednesday to cut oil production substantially with OPEC next year in an attempt to arrest a decline in the price of crude and prevent another global glut.
OPEC meets on Thursday in Vienna, followed by talks with allies such as Russia on Friday. The producer group’s de facto leader, Saudi Arabia, has indicated a need for steep reductions in output from January but has come under pressure from U.S. President Donald Trump to push oil prices lower.
Russian Energy Minister Alexander Novak told reporters he had held a “good” meeting with his Saudi counterpart Khalid al-Falih on Wednesday and that they would have more talks.
Saudi Arabia has indicated it wants the Organization of the Petroleum Exporting Countries and its allies to cut output by at least 1.3 million barrels per day, or 1.3 percent of global production.
Riyadh wants Moscow to contribute at least 250,000-300,000 bad to the cut but Russia insists the amount should be only half of that, OPEC and non-OPEC sources said.
Russia’s TASS news agency quoted an OPEC source as saying OPEC and its allies were discussing the idea of cutting output next year by reverting to production quotas agreed in 2016.
The move would mean reducing production by more than 1 million bpd. Saudi Arabia, Russia, and the UAE have raised output since June after Trump called for higher production to compensate for lower Iranian exports due to new U.S. sanctions.
Russia has so far resisted steep production cuts.
A source close to the Russian Energy Ministry said: “No one is eager to cut unless there is an emergency. It is the United States where we are seeing the bulk of the increase in oil output. OPEC and Russia will be very careful about voluntary ‘bloodletting’.”
Russia, Saudi Arabia, and the United States have been vying for the position of a top crude producer in recent years. The United States is not part of any output-limiting initiative due to its strict anti-trust legislation and fragmented oil industry.