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."
|October, 19, 11:30:00|
|October, 19, 11:25:00|
|October, 19, 11:20:00|
|October, 19, 11:15:00|
|October, 19, 11:10:00|
|October, 19, 11:05:00|
PLATTS - Norwegian natural gas exports to the UK jumped to their highest in six months Wednesday as consistently high UK prices incentivized flows normally only reserved for wintry periods.
AZERNEWS - The estimated cost of construction of nuclear power plant of Russian design in Uzbekistan will be about $ 11 billion, the launch of the first power unit has been planned for 2028, the Aide to the President of the Russian Federation Yury Ushakov said.
SHANA - Managing Director of the Iranian Gas Engineering and Development Company (IGEDC) Hassan Montazer Torbati said the supply of one billion cubic meters per day of natural gas by National Iranian Gas Company (NIGC) was one of the goals of the company by 2021.
WNN - China and Belgium have signed a framework agreement on cooperation in the peaceful use of nuclear energy. The agreement was one of several accords signed in Brussels yesterday during a meeting between Chinese Premier Li Keqiang and Belgian Prime Minister Charles Michel.