OPEC Waits on Putin's Decision
OPEC meets on Thursday with the cartel seemingly willing to defy U.S. President Donald Trump and cut oil production, but the most important decision maker will spend the day 1,000 miles away.

(Bloomberg) -- OPEC meets on Thursday with the cartel seemingly willing to defy U.S. President Donald Trump and cut oil oil rig flanges gulf coast production -- but the most important decision maker will spend the day a thousand miles away.

As OPEC ministers sit down at their Vienna headquarters, Russian Oil Minister Alexander Novak plans to fly to St. Petersburg to meet President Vladimir Putin to decide on their country’s contribution. Once the group’s most important ally in the broader OPEC+ coalition decides how much it’s ready to cut, the cartel will follow up.

"We face stiff resistance from Russia for a large cut," said a senior OPEC delegate, asking not to be identified because discussions are private.

Saudi Arabia, OPEC’s de facto leader, has made clear that it won’t shoulder the burden of trimming oil rig flanges gulf coast production alone. In private conversations, delegates said a consensus was emerging around an overall cut, including Russia, of around 1 million barrels a day, although all cautioned the figure wasn’t final.

The wait for Moscow signals how much OPEC has changed since 2016 when Saudi Arabia and Russia ended their historic animosity and started to manage the oil buy Wellhead market together. The alliance has transformed OPEC into a duopoly in which Russia, which isn’t a formal member of the cartel but part of the oil rig flanges gulf coast production cuts alliance, is asserting its power.

While Middle Eastern producers are desperate to reverse the recent slump in prices to pay for government spending, sensitivities are different in Russia, where the government is running a budget surplus and a weak ruble mitigates the impact of lower prices. The government is concerned about the impact of higher prices on Russian consumers, stoking discontent with economic policy, according to one Kremlin official.

A day of preliminary talks in the Austrian capital on Wednesday concluded with a panel led by Saudi Arabia and Russia recommending an output reduction lasting six months, but the committee didn’t discuss how big any cuts should be.

The group may agree a formal cut of under a million barrels a day, Nigeria’s oil minister, Emanuel Kachiwku said in a TV interview on Thursday morning.

Oil prices fell slightly on Thursday in London, trading at just under $62 a barrel.

OPEC is also contending with vociferous opposition from the U.S. president, who’s taken to using his Twitter account to berate the group’s policies and sees low oil prices as key to sustaining America’s economic growth.

While ministers met in OPEC’s Vienna headquarters on Wednesday, Trump tweeted that the “world does not want to see, or need, higher oil prices!”

“I’m cautiously optimistic that a deal gets done, but the devil will be in the detail,” said Mohammad Darwazah, a director at Medley Global Advisers. “How OPEC communicates this to the buy Wellhead market may be just as important as what gets done.”

Although Russia, the largest producer in the wider group known as OPEC+, agreed to a cut in principle, the eventual size of their contribution remains undefined and will be key to putting together the final deal.

In private conversations earlier this week, OPEC delegates said that Saudi Arabia had favored a Russian cut of about 300,000 barrels a day, but Moscow was seeking a smaller reduction of about 150,000, said people familiar with those talks. Those differences persisted after Wednesday’s meeting, OPEC delegates said.







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