OIL PRICES: ABOVE $49 ANEW
According to FT, oil prices soared by more than 7 per cent towards $50 a barrel on Wednesday after two of Opec's most powerful members said they were hopeful of reaching the first deal to cut supplies since prices started to plummet two years ago.
Khalid al-Falih, Saudi Arabia's energy minister, said the cartel, which controls about a third of the world's oil production, was moving "close" to a deal and signalling it was was working to bridging a gap with its regional rival Iran.
However, he sought to manage expectations saying he was "not concerned about a no agreement scenario", arguing the oil market was already moving back towards balance.
Iran's oil minister Bijan Zanganeh said all Opec members were ready to compromise and there was a "framework for a deal". His tone was notably softer than in recent days. He said the cartel was targeting 1m to 1.2m b/d of cuts between its 14-members.
The ministers were speaking in Vienna where they are meeting to try and reach a deal to curb production and bring an end to a savage two-year downturn in prices that has shredded the budgets of its members.
Brent crude, the international oil marker, rose more than $3.00, or 7.2 per cent, to $49.73 in the late morning in London.
"The pressure is probably too great for them not to reach a deal," said Jason Schenker of Prestige Economics at the meeting in Vienna. "At the end of this meeting the oil price could have a five handle or a three handle — that's how big a potential swing we're talking about."
In September Opec reached a provisional accord in Algiers to bring its total production down to between 32.5m b/d and 33m b/d from a near record 33.8m b/d at the moment. But two months later, the group has yet to agree on how the cuts will be apportioned.
Iran, which is finding its feet after years of western sanctions, initially said it should be exempt like conflict-ridden Nigeria and Libya. It has since softened its stance, saying it will freeze its production, but arriving at an agreed level has proved problematic.
Saudi Arabia, which will shoulder the burden of any production cuts along with its Gulf allies, has asked Iran to curb output at close to 3.7m b/d, although privately it has indicated it may allow a higher level near 3.8m b/d.
Mr Falih told reporters that, based on Opec estimates, Iranian supply had recovered to pre-sanction levels and a freeze at this level would be well received by other members. "Hopefully this will be the framework," he said.
Should Opec strike a deal on Wednesday, the Saudi energy minister said he expected Russia and other countries outside of the cartel to cut around 600,000 b/d of production. The kingdom believes the co-operation of major producers outside of the cartel is necessary for any deal to be effective.
But he also criticised Russia's public stance that freezing its production, which has climbed to a post Soviet-era high, was acceptable.
"Freezing at an all-time high is not a contribution. [It's] not a match to what Opec is doing. Our discussion with Russia has been about a cut from non-Opec," he said.
"The comments suggest there is a growing convergence on positions between Saudi Arabia and Iran, which is essential for any deal," said Yasser Elguindi at Medley Global Advisors. "The big surprise would be a Russian contribution not just to freeze but to join Opec in cuts."
Algeria's energy minister Noureddine Boutarfa, one of the architects of the September accord to reduce output, said he was "99 per cent certain" Opec would reach a deal on Wednesday to cut production but did not provide any specifics.
The ministers held a breakfast meeting ahead of the formal gathering, an unusual step pointing to a last-minute push to improve the atmosphere among the group's members who have been at loggerheads since Algiers.
Abhishek Deshpande, analyst at Natixis said: "A deal now looks more likely, but there are still obstacles to overcome in the meeting."
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AN - China National Offshore Oil Corp. (CNOOC) is willing to invest $3 billion in its existing oil and gas operation in Nigeria, the Nigerian National Petroleum Corporation (NNPC) said on Sunday following a meeting with the Chinese in Abuja.
REUTERS - Production at Libya’s giant Sharara oil field was expected to fall by at least 160,000 barrels per day (bpd) on Saturday after two staff were abducted in an attack by an unknown group, the National Oil Corporation (NOC) said.
IMF - Output grew by 3.8 percent in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors. The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.
IMF - Higher oil prices and short-term portfolio inflows have provided relief from external and fiscal pressures but the recovery remains challenging. Inflation declined to its lowest level in more than two years. Real GDP expanded by 2 percent in the first quarter of 2018 compared to the first quarter of last year. However, activity in the non-oil non-agricultural sector remains weak as lower purchasing power weighs on consumer demand and as credit risk continues to limit bank lending.