Oil prices snapped lower after Saudi Arabia's energy minister said that a cut of 1 million barrels per day would be enough for OPEC and its allied oil producers.
The influential oil cartel is meeting at its headquarters in Vienna, Austria, with the aim of reaching an accord over production levels for the next six months. 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 had indicated previously that it wanted the group to curb output by at least 1.3 million barrels per day. However, Saudi Energy Minister Khalid al-Falih told reporters Thursday morning that a cut of 1 million barrels would be sufficient.
Oil market watchers were expecting a supply cut of around 1.2 million to 1.4 million barrels per day, and Al-Falih's comments caused prices to slide. International benchmark Brent crude was trading at $58.65 a barrel at around 10:30 a.m. London time, down around 4 percent for the session, while West Texas Intermediate (WTI) stood at $50.47, more than 4.5 percent lower.
He added that the kingdom is comfortable with the current oil price but confirmed that there had been no decision on an output cut yet. OPEC is 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.
Russian Energy Minister Alexander Novak was quoted 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.
OPEC began managing crude supply in partnership with Russia and several other nations last year in order to end a punishing downturn in oil prices.
The Middle East-dominated group produces around 40 percent of the world's oil and has a long history of adjusting production to guide the energy market.
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