OPEC and Russia poised to impose steep manufacturing cuts regardless of US stress

OPEC kingpin Saudi Arabia has been leading calls for the group to trim output, amid surging supply and fears that an economic slowdown will erode fuel demand.

The oil-rich kingdom has indicated it wants the group to curb output by at least 1.3 million barrels per day.

But, Russia has appeared reluctant to sign off on a reversal in production strategy. The non-OPEC heavyweight has warned the energy alliance must tread carefully this week to ensure it does not change course by 180 degrees whenever it meets.

On Thursday morning, OPEC was thought to be waiting on Russia before deciding the exact level of production cuts. Five unnamed delegates told Reuters ahead of the meeting that the group’s preferred level of supply cuts would effectively be conditional on Moscow’s contribution.

However, Russian Energy Minister Alexander Novak was quoted by Interfax as saying Thursday that it would be “much more difficult” for Moscow to cut oil output over the winter because of the cold conditions at Russian oil fields.

The likely outcome is OPEC and non-OPEC members agree to a supply cut of around 1.2 million to 1.4 million barrels per day. As always though, the hard part for the energy alliance is not figuring out a number, but rather how the group divvies up the cuts.

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