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article imageRussia cuts oil output as OPEC 'agrees' price too low

By AFP     Nov 25, 2014 in World

Rosneft has trimmed its oil output partly in response to sliding crude prices, the Russian oil giant said Tuesday, as an under-pressure OPEC mulled taking similar action.

Rosneft said it had cut its daily output by 25,000 barrels because of "market conditions". The token reduction represented less than one percent of the behemoth's total and did little to boost energy prices on depressed global commodity markets.

The announcement given in a company statement came after Rosneft chief executive Igor Sechin held talks with officials from Mexcio and OPEC members Saudi Arabia and Venezuela in Vienna, the venue for Thursday's key meeting of the Organisation of Petroleum Exporting Countries.

OPEC, whose dozen members together pump out about one-third of the world's crude, was to hold its most significant meeting in recent years.

The Vienna-headquartered cartel is under pressure from its poorer members like Venezuela and Ecuador to cut output after tumbling prices have slashed their precious revenues.

Crude futures have sunk 30 percent since June to four-year lows on the back of plentiful oil supplies, a strong dollar and worries about stalling energy demand in a weak global economy.

However the cartel's Gulf members, led by kingpin Saudi Arabia, have rejected calls for a cut unless they are guaranteed market share in the highly competitive arena, according to analysts.

- 'Price not good' -

Despite the apparent differences, OPEC and non-OPEC oil producers Tuesday agreed that crude prices have fallen too far, Venezuelan Foreign Minister Rafael Ramirez said.

"We agreed that the price is not good. Everybody is worried," he told reporters.

"We discussed the situation on the market, we shared our points of view and we agreed to keep in contact, and we will meet again in three months," he added.

Russian Energy Minister Alexander Novak was among participants in the meeting, while the four delegations failed to agree on a joint cut in output and left any such decision for OPEC members on Thursday.

The Rosneft statement said Sechin "believes that market players should be responding to market changes more proactively, and to this end it is required to jointly step into in-depth market research and analysis, and do it on a regular basis".

He did not say when the country's largest oil producer -- responsible for about 40 percent of Russia's total output-- implemented the curbs.

But they represent just a fraction of the 4.1 million barrels per day that Rosneft says it has averaged over the first 10 months of the year.

Ahead of the OPEC meeting, the world's top oil producer Saudi Arabia has cut what it charges US customers, in a move seen aimed at maintaining its market share as it is faced with increasing competition from cheaper oil extracted from shale rock in the United States.

Analysts say the kingdom is content to see shale oil producers -- and even some members of the cartel -- suffer from low prices and will resist pressure to reduce output and shore up the cost of oil.

Benchmark Brent crude oil traded at $78.88 a barrel in Tuesday trade after a loss of 80 cents compared with Monday's close. It had stood at $115 in June.

- Saudi silent -

Saudi Oil Minister Ali al-Naimi was silent about his government's intentions Monday as he arrived in Vienna.

His Iraqi counterpart Adel Abdel Mahdi arrived in the Austrian capital pushing for action, deeming the steep price drop "not acceptable".

OPEC pumped 30.6 million barrels per day last month, above its 30 million bpd oil target, according to the International Energy Agency which advises countries on energy policy.

"With many of the cartel's members suffering a rapidly deteriorating balance sheet given the recent rout in Brent prices, all eyes will be firmly fixed on this OPEC meeting for any indication of members taking steps to address the fundamental picture" of supply and demand, Sucden broker analyst Kash Kamal said Tuesday.

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