London — Brent oil futures edged higher on Friday after Russia seemed likely to contribute a bigger output cut to an Opec and non-Opec deal, but Saudi Arabia voiced pessimism on whether an agreement could be reached as Iran insisted on an exemption.
International Brent crude oil futures fell below $60 a barrel in early trade, but firmed to $60.17 a barrel by 10.41am GMT, up 11c from the close. US West Texas Intermediate (WTI) crude futures were down 18c at $51.3 a barrel.
The slight recovery came after crude slumped by almost 3% the previous day, with the Opec ending a meeting at its headquarters in Vienna, Austria, on Thursday without announcing a decision to cut crude supply.
Iran appeared on Friday to be the main obstacle for an Opec deal to cut oil production, as the group’s leader Saudi Arabia had yet to agree exemptions for sanctions-hit Tehran, two Opec sources said.
Saudi energy minister Khalid al-Falih said he was not confident a deal could be reached.
Opec also wants to get Russia on board with cuts. Russian energy minister Alexander Novak returned to Vienna on Friday after discussing Opec with Russian President Vladimir Putin in Moscow.
Novak said on Friday Russia would seek an agreement with Opec and non-Opec producers and a Russian energy ministry source said Moscow was ready to contribute a cut of about 200,000 barrels a day, up from the initial 150,000 barrels a day previously floated.
Opec delegates have been pushing for Moscow to cut around 250,000 barrels a day.
Analysts noted a big cut would be needed to reverse recent price falls and Russia’s volume was key to this.
“Reversing the overwhelmingly bearish price sentiment will likely require a credible and cohesive message from the Opec meeting,” US investment bank Jefferies said on Friday.
“Even a 1-million barrels-a-day cut could lead to a ‘sell-the-news’ reaction in the short term,” Jefferies added. “If no agreement is reached, oil prices have significant downside.”
Supply surge, price plunge
Oil producers have been hit by a 30% plunge in crude prices since October, as supply surges just as the demand outlook weakens amid a global economic slowdown.
Oil output from the world’s biggest producers — Opec, Russia and the US — has increased by 3.3-million barrels a day since the end of 2017 to 56.38-million barrels a day, meeting almost 60% of global consumption.
That increase alone is equivalent to the output of major Opec producer the United Arab Emirates.
The surge is largely down to soaring US crude oil production , which has jumped by 2.5-million barrels a day since early 2016 to a record 11.7-million barrels a day, making the US the world’s biggest oil producer.
As a result, the US last week exported more crude oil and fuel than it imported for the first time in records going back to 1973, according to data released on Thursday.