Crude prices have been falling since October because countries like the U.S. and Saudi Arabia are producing at high rates and due to fears that weaker economic growth would dampen energy demand. The price of both benchmark U.S. crude and the standard for internationally traded oil fell 22 percent in November.
The oil minister of Saudi Arabia, the heavyweight within OPEC, said Thursday that the country was in favor of a cut of 1 million barrels a day.
“I think a million will be adequate personally,” Khalid Al-Falih said upon arriving to the meeting in Vienna. He clarified that that would cover production for both OPEC countries as well as non-OPEC countries, like Russia, which have in recent years been coordinating their production limits with the cartel.
His Iraqi counterpart, Thamir Ghadhban, said: “I am optimistic that the agreement will stabilize the market, will stop the slide in the price (of oil).”
Investors did not seem convinced, however, and were pushing the price of oil down sharply again on Thursday, partly due to broader concerns that a trade war between the U.S. and China could escalate and hurt global growth. The international benchmark for crude, Brent, was down $2.91 at $58.65 a barrel.
The fall in the price of oil will be a help to many consumers as well as energy-hungry businesses, and U.S. President Donald Trump has been putting pressure publicly on OPEC to not cut production. He tweeted Wednesday that “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”
Experts say this week’s meeting of the Organization of the Petroleum Exporting Countries will influence the price of oil over the coming months. How strongly it does so could depend on Russia’s contribution, which will be determined in a meeting on Friday.
Analysts at Commerzbank estimate that if Russia is willing to step up its production cuts, OPEC and non-OPEC countries could trim production by a combined 1.3-1.4 million barrels a day. This “would be enough to rebalance the oil market next year,” they wrote in a note to investors.
While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump’s decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi. U.S. Senators say, after a briefing with intelligence services, that they are convinced that Saudi’s de-facto ruler, Crown Prince Mohammed bin Salman , was involved in Khashoggi’s death. Some experts say that gives the U.S. some leverage over the Saudis, though Al-Falih denied that on Thursday.
When asked if the Saudis had permission from Trump to cut production, Al-Falih replied: “I don’t need permission from any foreign governments.”
David Rising and Geir Moulson in Berlin and Anthony Mills in Vienna contributed to this report. Piovano reported from London.