Oil prices fall as OPEC meeting begins

In October, the oil price reached a four-year high of $86, but since then the price has dropped again to about $60 per barrel.

Moscow has shown willingness to cooperate with OPEC to cut oil production.

Saudi Arabia proposed a moderate oil-production cut from OPEC and its allies that would gently rebalance the market, seeking to walk a fine line between preventing a surplus and appeasing U.S. President Donald Trump.

To raise prices, OPEC members, who account for more than half of the world's oil output, will spend the next two days evaluating whether to renew their cooperation with Russian Federation and other non-cartel producers, or simply slash production further.

But a no-deal or an underwhelming agreement on Friday could send oil prices further down, potentially hurting production growth in the US shale patch.

Earlier, Saudi oil minister al-Falih had said that a cut of a million barrels per day would be ideal.

Brent crude, the worldwide benchmark, has plunged from $86 at the start of October to around $60 recently, over concerns at a glut in supply and faltering in demand. Moscow is expected to deliver its decision on further cuts by Friday.

The U.S. sold overseas last week a net 211,000 barrels a day of crude and refined products such as gasoline and diesel, compared to net imports of more than 2 million barrels a day on average so far in 2018, and an annual peak of more than 12 million barrels a day in 2005, according to the U.S. Energy Information Administration.

One issue that might complicate relations between the U.S. and OPEC is the murder of Saudi Arabian journalist Jamal Khashoggi by people linked to the government in Riyadh.

The Vienna meeting also comes only days after Qatar announced it would be the first country from the Middle East to withdraw from OPEC, saying it wanted to focus more on gas production.

The Saudi minister pointedly said Washington should back off.

"I'm hopeful that everyone in and even outside the organisation will be supportive to whatever requirements we need to do to balance the market", he said.

Experts say this week's meetings of the Organization of the Petroleum Exporting Countries will influence the price of oil over the coming months.

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

"The stakes are high now for OPEC".

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 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. "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.

Barclays said it expected "the global economy to slow over the next several quarters" although it added that "not one major economy is near recession". Falih also noted that production from some OPEC producers is falling.

  • Eleanor Harrison