Baghdad (AIN) -OPEC is considering exemptions for three nations from any potential oil-production cuts, two people with knowledge of the proposal said. Saudi Arabia’s oil minister said he doesn’t anticipate a difficult meeting when the group meets on November 27 to decide its response to slumping crude.
Iraq, Iran and Libya would not have to reduce supplies should the Organization of Petroleum Exporting Countries (OPEC) agree to cut output at its gathering in Vienna, according to the people, who asked not to be identified in line with their national policies. Ali Al-Naimi, Saudi Arabia’s oil minister, told reporters in the Austrian capital on Monday that it’s not the first time the oil market has been oversupplied.
Crude prices plunged into a bear market this year amid the highest US oil production in more than three decades and speculation that Saudi Arabia wouldn’t cut output in response to a surplus.
Oil-market analysts are perfectly divided on whether OPEC will cut output when it meets, or leave it unchanged.
“It makes sense that these three countries shouldn’t have to make further cuts” because they are already pumping less than they’re able to, Abhishek Deshpande, oil markets analyst at London-based Natixis, said by phone on Monday. Saudi Arabia would probably want assurances from Iran, Iraq and Libya that they won’t increase output, he said.
Brent crude futures slumped to a four-year low of $76.76 a barrel on November 14. Futures fell nine cents, or 0.1 per cent, to $79.59 on the London-based ICE Futures Europe exchange at 11:47am Singapore time.
The Saudi minister told reporters that he didn’t know what OPEC should do at its next meeting. Still, he said that the event won’t be difficult, without elaborating.
“Is this the first time that the market is oversupplied?” he said. “It is not the first time that the market is oversupplied.”
Russia’s energy minister said on Monday his country hasn’t decided to cut oil production as he prepares to meet with OPEC ministers to discuss the crude market. Russia is already helping to balance the oil market by keeping output steady, Alexander Novak said in an interview with state TV channel Rossiya 24.
There’s only a small chance that OPEC will agree to reduce output at this week’s meeting, he said.
Iraq plans to almost double oil production to six million barrels a day by 2017. It pumped 3.2 million barrels a day this year, according to data compiled by Bloomberg.