OPEC Seeks Oil Production Cuts Amid Impasse
The entrance to OPEC headquarters in Vienna, Austria.
At an 11-hour Vienna meeting of Organization of Petroleum Exporting Countries (OPEC) on October 28, officials deadlocked on a proposed agreement to curb oil production as several countries raised objections. Iran, Libya, and Nigeria insisted on retaining their rights to raise oil production, while Iraq, citing the need for oil revenue in the fight against ISIS, sought an exemption from the proposed 4 percent cut. Following the unsuccessful conference, officials from OPEC member states and non-members met on Saturday to shore up support for the failed measure. Russia also affirmed its backing of the deal, hoping to raise oil prices and fight an economic slump.
On September 28, OPEC announced in Algiers its plan to make “the first supply cuts in eight years,” reducing production from roughly 33.4 million barrels per day to between 32.5 and 33 million. However, OPEC member states failed to reach agreement on implementing the decision, and the Saturday talks ended without any definitive commitments.
Saudi Energy Minister Khalid al-Falih invited Russia’s energy minister to a meeting in Riyadh with other Gulf countries as part of his efforts to garner support for the OPEC production cut. However, Russia has been ambiguous as to whether it will cut production or merely leave it unchanged. Russia ranks second in the world in crude oil exports and first in exports of refined petroleum products.
Russia and Saudi Arabia had agreed in January 2016 to halt output, but both countries nevertheless increased production. According to OPEC data, Russia and Saudi Arabia boosted daily output to 11.08 and 10.14 million barrels in February, although the global oil supply dropped. In an initiative aimed to diversify their economy and attract foreign investment, Saudi Arabia’s Deputy Crown Prince, Mohammed bin Salman, announced a plan in April to divest about 5 percent of the government’s shares in the Saudi Arabian Oil Company (Aramco) and create a Public Investment Fund.