Nigeria has agreed in principle to a small cut in oil production as the Organisation of Oil Exporting Countries (OPEC) converge on Vienna, Austria, to take crucial decisions on the global ol industry.
This is in tandem with OPEC’s agreement to cut less than a million of barrels a day. Nigeria’s minister of state, petroleum, Ibe Kachikwu, disclosed this during a television interview in Vienna today.
“Some countries will struggle because their economies are very constrained” and Nigeria itself could only manage a small cut, Kachikwu said.
Bloomberg said Saudi Arabia proposed a moderate oil-production cut from OPEC and its allies that would gently rebalance the market, seeking to walk a fine line between preventing a surplus and appeasing U.S. President Donald Trump.
“We in the kingdom are going to be advocating something adequate to balance the market,” Energy Minister Khalid Al-Falih told reporters at the opening session of the group’s meeting in Vienna on Thursday. A cut of about 1 million barrels a day from the whole group should be adequate and “certainly we don’t want to shock the market.”
Events in the Austrian capital weren’t the only story on Thursday. As ministers sat down at the headquarters of the Organization of Petroleum Exporting Countries, Russian Oil Minister Alexander Novak flew to St. Petersburg to meet President Vladimir Putin to decide on their country’s contribution. If the group’s most important ally in the broader OPEC+ coalition decides to make a sizable cut, the cartel will follow up.
Saudi Arabia is equally prepared for a deal or no-deal situation, Al-Falih said. “If everybody is not willing to join and contribute equally, we will wait until they are.”
Oil fell after the remarks, losing $2.90 to $58.66 a barrel at 10:37 a.m. in London.
Saudi Arabia, OPEC’s de facto leader, has made clear that it won’t shoulder the burden of trimming production alone. In private conversations, delegates said a consensus was emerging around an overall cut, including Russia, of around 1 million barrels a day, although all cautioned the figure wasn’t final.
The wait for Moscow signals how much OPEC has changed since 2016 when Saudi Arabia and Russia ended their historic animosity and started to manage the oil market together. The alliance has transformed OPEC into a duopoly in which Russia, which isn’t a formal member of the cartel but part of the production cuts alliance, is asserting its power.
While Middle Eastern producers are desperate to reverse the recent slump in prices to pay for government spending, sensitivities are different in Russia, where the government is running a budget surplus and a weak ruble mitigates the impact of lower prices. The government is concerned about the impact of higher prices on Russian consumers, stoking discontent with economic policy, according to one Kremlin official.
A day of preliminary talks in the Austrian capital on Wednesday concluded with a panel led by Saudi Arabia and Russia recommending an output reduction lasting six months, but the committee didn’t discuss how big any cuts should be. Al-Falih said his preference was for a reduction extending into the third quarter.