Trump asks OPEC not to cut production

Oil prices skid amid global stock market slump, swelling US supply

The long rally in oil prices lasted until October.

The US is not in a position to tell OPEC or Saudi Arabia what to do, Saudi Energy Minister Khalid al-Falih told journalists when asked about Donald Trump's reaction to curbing production of crude by the kingdom or the oil cartel.

OPEC's reliance on non-members like Russian Federation highlights the cartel's waning influence in oil markets, which it had dominated for decades.

Saudi Arabia has been calling steep cuts in oil output and was expected to raise those demands during the meeting, but pressure from the US may convince Saudi leaders to take a softer tone.

Traders said oil prices were being weighed down by weak global financial markets, which saw stock markets tumble on Thursday.

Falih said a production cut of 1.3 million barrels per day is "excessive" in light of Alberta's decision this week to cut 325,000 bpd in order to drain the Canadian province's brimming stockpiles of crude. In private conversations, delegates said a consensus was emerging around an overall cut, including Russian Federation, of around 1 million barrels a day, although all cautioned the figure wasn't final.

OPEC, an intergovernmental organisation of 15 nations, is looking to slash oil production over fears of a glut in supply which has seen prices crashing globally in recent weeks.

Oil prices skid amid global stock market slump, swelling US supply
OPEC members expected to agree oil production cut

One issue that might complicate relations between the U.S. and OPEC is the murder of Saudi Arabian journalist Jamal Khashoggi by people linked to the government in Riyadh. The cartel and its allies are meeting in Vienna this week, trying to make a tough choice to cut output and support prices, risking the loss of more market share to the US. The report quoting Oman's Oil Minister Mohammed bin Hamad Al-Rumhy said that the actual volumes were still being discussed and the cuts would take September or October 2018 as baseline figures and last from January to June.

Iran's Zangeneh said it was the first time a USA president was trying to tell OPEC what to do. However, Libya, which had sought an exemption in 2016, said it was hopeful of procuring one, while Iranian oil minister Bijan Zanganeh said Tehran was unwilling to cut when it was still under U.S. sanctions.

"The big unknown is how President Trump will react to any production cuts", said analysts at ING.

The shift to net exports is the dramatic result of an unprecedented boom in American oil production, with thousands of wells pumping from the Permian region of Texas and New Mexico to the Bakken in North Dakota to the Marcellus in Pennsylvania.

OPEC is also riven by internal conflict, particularly the rivalry between Saudi Arabia and Iran.

Although Russia, the largest producer in the wider group known as OPEC+, agreed to a cut in principle, the eventual size of their contribution remains undefined and will be key to putting together the final deal.

Barclays said it expected "the global economy to slow over the next several quarters" although it added that "not one major economy is near recession".

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