Opec, non-Opec meeting ends without deal

OREANDA-NEWS. October 31, 2016. Opec ministers failed to win commitments to limit crude output from a half-dozen non-Opec producers during a meeting in Vienna today, setting the stage for further discussions ahead of the exporter group's next ordinary meeting on 30 November.

Opec officials described the meeting with non-Opec producers Russia, Oman, Brazil, Kazakhstan, Azerbaijan and Mexico as "a positive development on the road to reaching an agreement" to implement Opec's preliminary deal to curb production, reached in Algiers in late-September.

"The meeting engaged in intensive and fruitful deliberations on how best to return much-needed stability to the market," the post-meeting communique read. "The participants shared their readiness to enhance the rebalancing process, including through joint coordinated actions implemented on a sustainable basis, in order to accelerate the ongoing drawdown of the stock overhang."

The meeting followed an 11-hour high-level technical committee meeting of Opec delegates one day earlier, which sought to pin down details of how the 32.5mn-33mn b/d production goal from "the Algiers accord" will be applied. No final decisions were reached in that meeting. Opec has said it hopes to implement the accord at its 30 November meeting.

Opec is seeking the co-operation of non-Opec members in order to shore up the sustainability of its Algiers decision and support market rebalancing.

The next planned meeting will take place on 5 November among Opec governors. A follow-up meeting will be "between 25 and 30 November," Kazakhstan's deputy energy minister Magzum Myrzagaliyev said.

Ahead of today's meeting, Azerbaijan's energy minister Natig Aliyev underscored the necessity of a buy-in from "all members and all players" in any attempt to implement a plan to freeze output. He highlighted Opec heavyweights Iran and Iraq in particular, which alongside Libya and Nigeria, are seeking exemptions from output curbs.

Iran is still in the process of rebuilding its production after it was freed from nuclear-related sanctions in January, while Iraq argues that more than a decade of war, including the current fighting with Isis, and economic crises have drained its revenues.

Iran and Iraq's positions are likely to only add extra pressure on Opec's number one producer, Saudi Arabia, and its Mideast Gulf allies to shoulder the bulk of the cuts.

Oman, the Mideast Gulf's largest non-Opec producer, still remains willing to join in any collective action "to freeze or cut" production, a source close to the delegation said today. Omani crude oil and condensate output averaged just shy of 1.01mn b/d in the first nine months of the year.

Oil and gas secretary in the Brazilian ministry of mines and Energy Marcio Felix declined to state any position the country held with regards to cooperation, saying early in the day that "we are going to listen. We are here as observers." Speaking after the meeting ended, Felix said "discussions will continue to 30 November."

Front-month Ice Brent futures were holding at just below the \\$50/bl mark after the meeting's conclusion.