OPEC nations, Russian Federation look to cut oil output to lift prices

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Source Reuters

However, the upward pressure on oil prices has been offset by weakening global demand as the US-China trade dispute hits global growth prospects and non-OPEC supply of the commodity rises.

The group, which pumps more than half the world's oil, agreed in Vienna on Friday to reduce its output target by 500,000 barrels a day, said a delegate, bringing it in line with recent production levels.

Under the new deal the size of collective daily production cuts is set to be deepened to 1.7 million barrels.

"The oil market got livelier, but not because of the Opec meeting", said Norbert Rücker, an analyst at Julius Baer. This is highly unlikely, however, the market is up nine weeks from its last main... They began a closed-door meeting at around 1130 GMT to thrash out how the additional cuts will be distributed.

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Saudi Arabia needs prices of at least $80 per barrel to balance its budget, much higher than most other oil producers, and also needs to support a share flotation of its national oil company Saudi Aramco.

Oil prices have nonetheless remained steady since OPEC's meeting in July, hovering around $60 a barrel for the European benchmark Brent crude.

Investors seemed impressed by Opec's resolve, however, pushing up energy prices sharply.

Secondary sources were designated OPEC and non-OPEC production reference sources, while some countries had stated prior to the 177th OPEC meeting that they would not accept secondary sources as such, and that it was preferable for each country to report their oil output. But they also do not want to lose global market share to the United States, which keeps pumping more oil.

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However, the group said that "in addition, several participating countries, mainly Saudi Arabia, will continue their additional voluntary contributions", meaning the overall production cut would be 2.1 million barrels per day.

Not all OPEC members were convinced of the need to cut deeper. But some countries have been producing more than their expected.

ING bank analysts said the key question was whether the new cuts were real or just a matter of Saudi Arabia formalizing its current over-compliance. A sticking point in the talks had been how to split the cuts between producers.

For Russia, it means that some 760,000 bpd of condensate would be excluded from calculations, meaning Russian baseline production used for cuts would decline to around 10.66 million bpd from 11.42 million.

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