OPEC looks to cut oil production to bolster falling price

International Brent crude oil futures were up 40 cents or 0.7 percent at $62.09 per barrel

OPEC - together with a group of non-OPEC producers led by Russian Federation - started withholding oil supplies up to 1.8 Million barrels per day since 2017 to prop up prices and reduce oil inventories.

Negotiations between OPEC members are fraught, however, as some feel that Saudi Arabia wields too much clout in setting policy.

Saudi Arabia has indicated it wants the Organisation of the Petroleum Exporting Countries (OPEC) and its allies to cut output by at least 1.3 million barrels per day, or 1.3% of global production.

"We're looking for a sufficient cut to balance the market, equally distributed between countries", Khalid al Falih told reporters ahead of an OPEC meeting in the Austrian capital.

Oil prices have extended losses as US President Donald Trump once again tried to dampen OPEC's efforts to tackle falling oil prices amid market expectations on further output cut.

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.

"We assume a cut of around 1.0 million barrels per day in the first quarter of next year, using October 2018 production levels as a reference".

Oil prices fell 1 percent on Wednesday, weighed down by swelling United States inventories and a plunge in global stock markets as China's government warned of increasing economic headwinds.

Saudi Arabia, the heavyweight within OPEC, said Thursday it was in favor of a cut of about a million barrels a day.

Khashoggi, a prominent critic of the polices of Saudi crown prince Mohammed bin Salman, was killed in the Saudi consulate in Istanbul on 2 October.

OPEC agreed in principle to cut production during a meeting at its headquarters in Vienna, Austria on Thursday, two sources told Reuters.

The Saudi energy minister stressed that he doesn't support any exemptions from further slashing of oil output.

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day.

"Given the economic sanctions being reimposed by the United States, the Islamic republic "(won't) join any agreement for cutting production because of the special situation Iran faces", Zanganeh said.

OPEC's reliance on non-members like Russian Federation highlights the cartel's waning influence in oil markets, which it had dominated for decades. "Given the recent ramp-up in supply from these producers, this represents a year-on-year decline in crude output of just 0.2 million barrels per day for 2019", Hittle said. While Saudi Arabia, the group's biggest producer, will shoulder most of the burden, the kingdom wants commitments from other countries before completing a final deal.

"We're still debating the distribution" of any possible cuts, he added. The power of OPEC has been diminished, undercutting one of the major geopolitical forces of the last half century.

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