DUBAI/LONDON/MOSCOW: OPEC members moved closer on Monday to extending existing oil production cuts for three months from January but still need to convince the wider OPEC+ group led by Russia to support the move, ministers and delegates said on Monday.
"I think within OPEC there was consensus," Iran's oil minister, Bijan Zanganeh, told the Iranian oil ministry's news agency, SHANA. "Tomorrow's meeting will be difficult and require negotiations and patience."
OPEC delegations reconvene for further talks on Tuesday, the group said in a statement. OPEC+, which includes Russia and other allies, was scheduled to hold its meeting on Tuesday at 1300 GMT.
OPEC+ had been due to ease existing production cuts by 2 million barrels per day (bpd) from January. But with demand still under pressure amid the coronavirus pandemic, OPEC+ has been considering extending existing cuts of 7.7 million bpd, about 8per cent of global demand, into the first months of 2021, a position backed by Saudi Arabia, sources said.
After consultations on Sunday failed to reach agreement, sources said Russia suggested a possibility for OPEC+ to start increasing output by 0.5 million bpd each month from January.
Further complicating the picture, OPEC member the United Arab Emirates was also signalling it would be willing to support a rollover only if members improved compliance with cuts.
"OPEC will probably agree to extend the current production ceiling for the first quarter of 2021, if the non-OPEC countries agree with it in (Tuesday's) meeting," an OPEC source said.
Saudi energy minister Prince Abdulaziz bin Salman told the OPEC meeting on Monday he would step down as a co-chair of a ministerial monitoring committee, three OPEC sources said. It was not clear why he was planning to do it.
Kremlin spokesman Dmitry Peskov said differences between Russia and OPEC were not as severe as in early 2020, when disagreements led to a collapse in talks and a surge in output.
But Peskov said Russian President Vladimir Putin had no plans to call Saudi Arabia's leadership before the OPEC+ meeting, a move that in the past has helped smooth over any dispute.
OPEC+ has to strike a delicate balance of pushing up prices enough to help their budgets but not so much that rival U.S. output surges. U.S. shale production tends to climb as prices rise above US$50 a barrel. Adding to the challenge within OPEC+, Moscow's finances can tolerate lower oil prices than Riyadh's.
Oil prices, which were down 1.2per cent at around US$47.59 a barrel by 2000 GMT, could fall as much as 10per cent if OPEC failed to roll over cuts, Deutsche Bank said in a note.
Oil had a bull run last week, triggered by hopes for a COVID-19 virus vaccine and expectations of a rollover in OPEC+ cuts. Graphic: OPEC+ Scenarios and Impact on Oil Inventories https://fingfx.thomsonreuters.com/gfx/ce/xklpybqkbvg/OPECper cent20Scenarios.PNG
(Reporting by Rania El Gamal in Dubai, Ahmad Ghaddar in London and Olesya Astakhova in Moscow; Additional reporting and writing by Alex Lawler and Bozorgmehr Sharafedin in London; Writing by Dmitry Zdhannikov; Editing by Marguerita Choy and Matthew Lewis)