VIENNA-OPEC and Russia have agreed to join a significant production cut that would have absorbed global oil growth worldwide.
The Organization of Petroleum Exporting Countries together with Russia and its allies oil production from a collective of 1.2 million barrels per day, under the agreement still under negotiation. OPEC nations would cut 800,000 barrels and the Russian-led group would handle the rest.
Brent crude rose 5.2% to $ 63.11 a barrel of the London Exchange.
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Sources: Renaissance Capital (Russia); ERC Equipoise (Venezuela, Nigeria, Angola, Ecuador); International Monetary Fund (all others)
Talks hit an obstacle at the start of this week, when Saudi Arabia and Russia are not agreeing to share the pain of curbs to stop a 30% drop in prices of oil. The influence exerted by Russia on cartel decisions has suggested that Saudi Arabia is losing its grip on the group, delegates say. Although Russia is not a member of OPEC, the Saudis have insisted that Moscow join the recent meetings
. The negotiations took place in the midst of the crisis within the organization of almost 60 years. Some smaller oil-producing nations fear that their voices have declined in two years since the cartel made an alliance with Russia.
The cartel is struggling to convince markets that it can stabilize oil prices. Sarah Kent of WSJ gives an insight into the current state of OPEC power.
Some members also say that the Saudis are too tied to US President Donald Trump. Saudi Arabia has commissioned a study to examine how the world could look without the cartel. Qatar said it was cutting ties with the group.
"OPEC, or more precisely Saudi Arabia, has been the main head of the oil world for nearly six decades, yet in these days it does not seem able to make a decision without the blessing of the Russia, much less without risking the US President's wrath, "said Stephen Brennock, analyst at the brokerage PVM Oil Associates Ltd.
But Saudi Arabia also wants to be cautious in its action on the fears that could upset US President Donald Trump as an ally.
The White House said it would stand by despite the killing of a dissident journalist by Saudi agents, but it is pushing Riyadh not to push oil prices up. The Saudis "are considering a silent cut", said a delegate, referring to a reduction that would not have been announced.
"The rise of the US energy domain is starting and there is not enough cohesion in OPEC to fight it in the long term," said Petromatrix analyst Olivier Jakob on a Friday note
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