OPEC leader Saudi Arabia sees market stabilizing
Oil prices down 30 per cent since June
OPEC leader Saudi Arabia signalled on Wednesday it was unlikely to push for a major change in oil output at the producer group's meeting this week, a day after Russia refused to co-operate in any production cut and threatened to unleash an oil price war.
Saudi Oil Minister Ali al-Naimi said he expected the oil market "to stabilize itself eventually" but did not comment on four-country talks with Russia held on Tuesday.
OPEC's meeting on Thursday will be one of the most crucial in recent years, with oil prices having tumbled some 30 per cent since June due to booming U.S. shale oil output and slower global economic growth.
Oil futures on Wednesday fell 40 cents to a four-year low of $73.69 US a barrel. In late June, oil was trading above $100 US a barrel.
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 per cent of global oil, came to Tuesday's meeting amid hints it might agree to cut output as it is suffering from oil's price fall and Western sanctions over Ukraine.
But as the meeting with Naimi and officials from Venezuela and non-OPEC member Mexico ended on Tuesday, Russia's most influential oil official, state firm Rosneft's head Igor Sechin, emerged with a surprise message - Russia will not reduce output even if oil falls to $60 per barrel.
He added that he expected low oil prices to do more damage to producing nations with higher costs, in a clear reference to the shale oil boom in the United States.
Sechin's suggestion that Russia - in desperate need of oil prices above $100 per barrel to balance its budget - was ready for an oil price war took many at OPEC by surprise.
"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.
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 over 1 million bpd in the first half of next year.
While the statistics speak in favour 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.
While price hawks such as Venezuela have urged an immediate output cut to support prices, some Saudi officials told private briefings in recent months that the kingdom was prepared to withstand low oil prices - possibly $70 per barrel - for a prolonged period.
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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.