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 Saudi Oil Minister Ali al-Naimi said he expected the oil market "to
stabilize itself eventually" but did not comment on talks with
Russia held on Tuesday, which produced no firm pledge from Moscow to
help support flagging oil prices.
Iranian Oil Minister Bijan Zangeneh said some OPEC members, although
not Iran itself, were gearing up for a battle over market share and
insisted that non-OPEC producers needed to participate in any
OPEC-led output cut.
"The most important thing for all of us is the unity and solidarity
of OPEC, and in this situation I believe we need to have the
contribution of non-OPEC producers for managing the market,"
Zangeneh told reporters.
"Some OPEC members believe that this is the time where we need to
defend market share ... All the experts in the market believe we
have oversupply in the market and next year we will have more
oversupply," he added.
OPEC's meeting on Thursday will be one of its most crucial in recent
years, with oil prices having tumbled some 30 percent since June to
below $79 per barrel due to booming U.S. shale oil output and slower
global economic growth.
Among the 12 members of the Organization of the Petroleum Exporting
Countries, Venezuela and Iraq have called for output cuts. Naimi has
not commented on what the group should do.
OPEC usually faces huge tensions from within but as talks over
Iran's nuclear program ended with no breakthrough on Monday, most
members felt relief they will not have to deal with a deluge of
Iranian oil, currently hit by Western sanctions.
Non-OPEC member Russia, which produces 10.5 million barrels per day
(bpd) or 11 percent of global oil, came to Tuesday's meeting amid
hints it might agree to cut output as it suffers from oil's price
fall and Western sanctions over Ukraine.
But as that meeting with Naimi and officials from Venezuela and
non-OPEC member Mexico ended, Russia's most influential oil
official, state firm Rosneft's <ROSN.MM> head Igor Sechin, emerged
with a surprise message - Russia will not reduce output even if oil
falls to $60 per barrel.
Sechin added that he expected low oil prices to do more damage to
producing nations with higher costs, in a clear reference to the
shale boom in the United States.
Many at OPEC were taken by surprise by Sechin's suggestion that
Russia - in desperate need of oil prices above $100 per barrel to
balance its budget - was ready for a price war.
"Gulf states are less bothered about a price drop compared to other
OPEC members," an OPEC source close to Gulf thinking said, adding
that non-OPEC members ultimately needed to cut output if they
expected the group to defend prices.
RUSSIA SKEPTICAL ON OPEC CUT
On Wednesday, Russian Energy Minister Alexander Novak said the
country's energy companies would produce around the same amount of
oil next year as they did in 2014.
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He told reporters in Moscow he was skeptical that OPEC would decide
on Thursday to cut output quotas.
OPEC produces 30 million bpd, or a third of global oil. Its own
publications have shown in recent months that global supply will
exceed demand by more than 1 million bpd in the first half of next
year.
While the statistics speak in favor of a cut, the build-up to the
OPEC meeting on Thursday has seen one of the most heated debates in
years about the next policy step for the group.
An OPEC delegate from one of the smaller oil producers suggested on
Wednesday that the group's meeting could be prolonged.
"They must agree, even if they have to stay here for two days. It is
a matter of death or survival for budgets," the delegate said.
"It might take a bit longer than the ordinary meetings."
While price hawks such as Venezuela have urged an immediate output
cut, some Saudi officials told private briefings in recent months
that the kingdom was prepared to withstand low prices - possibly $70
a barrel - for a prolonged period.
Those messages have sparked conspiracy theories ranging from Saudis
seeking to curtail the U.S. oil boom, which needs high prices to
remain profitable, to Riyadh looking to undermine Iran and Russia
due to their support of Saudi's arch-enemy, Syrian President Bashar
al-Assad.
"I think even Saudi Arabia doesn't know yet whether a cut can be
achieved," said Virendra Chauhan, an analyst at the Energy Aspects
think tank.
(Additional reporting by Rania el-Gamal and David Sheppard; Writing
by Dmitry Zhdannikov; Editing by Dale Hudson)
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