Crude Plunges After Saudi's Propose Smaller-Than-Expected Production Cut

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The Organisation of the Petroleum Exporting Countries (Opec) has made a planned cut in oil production effectively conditional on the contribution from non-Opec producer Russian Federation, delegates said on Thursday as the group gathered in Vienna for a meeting aimed at supporting battered oil prices.

Despite the Iranian official's remarks, Kuwait's oil ministry said on its Twitter account on Wednesday that a long-term cooperation agreement is expected to be signed between OPEC and non-OPEC countries.

The measure is aimed at controlling global oil prices that have seen a dramatic crash of more than 30 percent over the last two months, placing the budgets of oil-exporting nations under considerable pressure. Trump wrote in a tweet on Wednesday.

Russia's TASS news agency reported on Wednesday that OPEC and its partners may return production quotas to 2016 levels by reducing oil production by more than 1 million barrels per day.

But if oil producers close the taps, they risk choking off the global economy, which needs affordable oil to keep running.

Donald Trump has often complained about OPEC this year as higher crude oil prices have raised fuel cost.

Saudi Arabia is hoping Russian Federation, one of OPEC's most important allies, cuts down its production by about 250,000 barrels per day, but Russian Federation wants to limit its cut to half that amount. He also said that a 1 million bpd production cut was acceptable.

Iran, OPEC's third-largest producer, does not want to be part of the Saudi plan. US President Donald Trump threatened on Tuesday to place "major tariffs" on Chinese goods imported into the United States if his administration didn't reach a desirable deal with Beijing.

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Bank of America said it expected Brent and WTI prices to average $70 and $59 per barrel respectively in 2019.

So far, OPEC members have lost $9 billion in total against $2.7 billion earned by the producers which have increased their production, he said.

Possibly complicating any Opec decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October.

Otherwise, he added, the United States official has adopted an unprofessional, naïve, and meddlesome approach.

Saudi energy minister Khalid al-Falih, OPEC's de-facto leader, has in recent weeks travelled to Libya and Nigeria to press them on the exemptions, though no public commitments have been announced.

"The stakes are high now for OPEC", he said.

In a surprise move on Monday, Qatar - which has been an OPEC member since 1961 - said it would quit the cartel next month in order to focus on gas production.

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