Sat | Mar 24, 2018

OPEC reaches deal to cut oil production despite lingering disagreements

Published:Wednesday | September 28, 2016 | 3:21 PM
Khalid Al-Falih Minister of Energy, Industry and Mineral Resources of Saudi Arabia answers questions as part of the 15th International Energy Forum Ministerial meeting in Algiers, Algeria, on Tuesday.

ALGIERS, Algeria (AP):
OPEC countries neared agreement on a preliminary accord Wednesday to limit oil production and support oil prices, despite lingering disagreements between regional rivals Saudi Arabia and Iran.

Officials from the Organization of the Petroleum Exporting Countries (OPEC) will meet informally on the sidelines of an energy conference in Algiers to try to find common ground on how to support oil markets. Experts say that would require a decision to limit output – an idea Iran still views with skepticism, as it's trying to restore its oil industry since emerging from international sanctions this year.

Algerian officials said participants reached a "pre-accord" on production curbs to be finalised at an OPEC meeting in Vienna in November. Algeria's prime minister is scheduled to provide details later Wednesday night. The officials were not authorised to be publicly named.

Algerian officials shuttled through the night between delegations to try to secure agreement.

IN PHOTO: General view of a meeting of oil ministers of the Organization of the Petroleum Exporting countries, OPEC, in Algiers, Algeria, on Wednesday.

Earlier, Iranian Petroleum Minister Bijan Namdar Zanganeh played down the OPEC gathering, calling it "just a consultation meeting ... If there is a decision, it should be taken at the next (OPEC) meeting in Vienna in November."

The price of crude oil has fallen sharply since mid-2014, when it was over $100 a barrel, dropping below $30 at the start of this year. On Wednesday, the US contract was trading at $44.87 a barrel, up 20 US cents on the day.

Saudi Arabia, the world's biggest oil producer and Iran's rival for power in the Middle East, appears to be more amenable to some sort of production limit, certainly more so than in April when OPEC failed to agree on measures to curb supplies.

Saudi Energy Minister Khalid Al-Falih has this week promised to "support any decision aimed at stabilising the market."

Over the past couple of years, OPEC countries, led by Saudi Arabia, had been willing to let the oil price drop as a means of driving some US shale oil and gas producers out of business. Shale oil and gas requires a higher price to break even.

Those lower prices have hurt many oil-producing nations hard, particularly OPEC members Venezuela and Nigeria, but also Russia and Brazil.