Opec’s internal disagreements over how to implement oil-supply cuts agreed last month prevented a deal to secure the cooperation of other major suppliers.
More than 18 hours of talks over two days in Vienna yielded little more than a promise that the world’s largest oil producers would keep on talking. Discussions will continue in late November, just days before the Organization of Petroleum Exporting Countries is supposed to finalize the accord that lifted oil prices to one-year highs.
Non-Opec nations ended talks with the group on Saturday without making any supply commitments, Brazil’s Oil and Gas Secretary Marcio Felix said after the meeting. The outcome of the process hinges on Iran and Iraq, two nations that are more interested in increasing production than reducing it, said Azerbaijan’s Energy Minister Natiq Aliyev.
While Saturday’s meeting was a successful “first step,” oil-producing nations need to continue dialog and “come up with real numbers” before cuts can begin, Kazakhstan’s Deputy Energy Minister Magzum Mirzagaliyev said in an interview after the meeting.
A deal wasn’t possible because internal Opec talks on Friday reached an impasse over the role of Iran and Iraq, both of which want to be exempt from any cuts. While non-member Oman said Saturday it was willing to cooperate in a supply deal, it couldn’t commit to a specific output cut until Opec had its own agreement.
Opec’s surprise agreement in Algiers to make the first supply cuts in eight years will only make a serious dent in a record oil surplus if producers outside the group join in. While the accord helped push oil prices to a 15-month high above $50 a barrel earlier this month, they have subsequently fallen as several members disputed the production estimates that would determine the size of cuts. Failure to implement last month’s accord will hurt oil producers, the organization’s top official warned.
Opec agreed in the Algerian capital on Sept. 28 to reduce output to a range of 32.5 million to 33 million barrels a day, compared with about 33.4 million in September. Friday’s meeting of technical experts from members of the group was intended to finalize details of how those supply curbs would be shared. Talks with non-Opec nations on Saturday sought to seek wider participation in cuts.
None of the countries that attended Friday’s meeting specified how much they are willing to cut, said one delegate, who asked not to be identified because the meeting was private. Progress was made on the methodology to be used for allocating individual production curbs, the delegate said.