OPEC Tentatively Agrees Oil Cut, Waits For Russia To Commit

Iranian Minister of Petroleum Bijan Namdar Zangeneh arrives prior to the start of a meeting of the Organization of the Petroleum Exporting Countries, OPEC, at their headquarters in Vienna, December 6, 2018

VIENNA, Dec 6 (Reuters) -

OPEC tentatively agreed an oil output cut on Thursday but was waiting for a commitment from non-OPEC heavyweight Russia before deciding the exact volumes for a production reduction aimed at propping up crude prices, two sources from the group said.

Russian Energy Minister Alexander Novak flew home from Vienna earlier for talks with President Vladimir Putin in St Petersburg. Novak returns to the Austrian capital on Friday for discussions among Saudi-led OPEC and the group's allies.

The price of crude has fallen almost a third since October but U.S. President Donald Trump has demanded the Organization of the Petroleum Exporting Countries make oil even cheaper by refraining from output cuts.

"We hope to conclude something by the end of the day tomorrow ... We have to get the non-OPEC countries on board," Saudi Energy Minister Khalid al-Falih told reporters before the OPEC meeting started.

"If everybody is not willing to join and contribute equally, we will wait until they are."

Falih said all options were on the table. Possible output cuts by OPEC and its allies ranged from 0.5-1.5 million bpd, and 1 million bpd was acceptable, he said.

OPEC's closed-door meeting concluded after 4-1/2 hours without yielding concrete figures, several delegates said, adding that many countries including Iran, Libya and Venezuela were seeking exemptions from cuts.

Brent oil futures fell as much as 5 percent to below $59 per barrel on fears that there could be no deal but later recovered somewhat, trading down 3.5 percent by 1535 GMT.

"It is unlikely to spark a meaningful price rally, but also will not be so dire either. In many respects it is the middle road, which may be the optimal solution," said Greg Sharenow, executive vice-president for Pimco, who helps manage a $15 billion commodities fund at the $1.77 trillion U.S. investment management firm.

OPEC delegates have said the group and its allies could cut by 1 million bpd if Russia contributed 150,000 bpd of that reduction. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.

Novak said on Thursday that Russia would find it harder to cut oil output in winter than other producers because of the cold weather.

Oil prices have crashed as Saudi Arabia, Russia and the United Arab Emirates raised output since June after Trump called for higher production to offset lower exports from Iran, OPEC's third-largest producer.

TRUMP RAISES PRESSURE

Iranian exports have plummeted after the United States imposed fresh sanctions on Tehran in November. But Washington gave sanctions waivers to some buyers of Iranian crude, further raising fears of an oil glut next year.

"Hopefully OPEC will be keeping oil flows as is, not restricted. The world does not want to see, or need, higher oil prices!" Trump wrote in a tweet on Wednesday.

Iranian Oil Minister Bijan Zanganeh said on Thursday he would support a cut as long as Iran did not need to reduce its own output. Iraqi Oil Minister Thamer Ghadhban said Iraq as OPEC's second-largest producer would support and join a cut.

Possibly complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.