A view of the OPEC Headquarter in Vienna (AFP)
Vienna: The OPEC oil cartel held tense talks Wednesday to try to agree its first output cut in eight years, sending oil prices soaring on hopes it will defy gloomy expectations.
Brent North Sea crude for January delivery jumped $3.83 to $50.21, the first time it has risen above $50 in a month. West Texas Intermediate won $3.59 to $48.82 per barrel, the highest level in a week.
As OPEC ministers began their meeting, Khaled al-Falih, energy minister of the cartel's biggest producer Saudi Arabia, sounded an upbeat note.
"We don't know (if a deal will be reached)," he said. "We will find out during the meeting. I think the sentiment generally is optimistic and positive."
In comments likely directed at Iraq and regional rival Iran, more reticent about reducing the flow of crude, Falih said that cuts have to be shared around OPEC "in an equitable way".
Iraq's Oil Minister Jabbar al-Luaibi said he was "very optimistic we're going to come with very fruitful results... There will be a cut, yes, definitely," Bloomberg News reported.
- Devil in the detail -
In September the cartel agreed in principle to lower production to 32.5-33.0 million bpd, meaning a cut of between 600,000 and 1.1 million barrels per day (bpd).
Falih said he was aiming for the cartel to reduce its output to 32.5 million bpd, while he maintained that non-OPEC producers should limit their production by 600,000 barrels a day.
"It will mean that we take a big cut and a big hit from our current production and from our forecasts for 2017," he said.
The cartel's cut in output would be aimed at reducing the massive supply glut that has depressed prices over the past two years.
But finalising the agreement has proven difficult, with Iran keen to increase oil output to pre-sanctions levels and Iraq short of money to fight Islamic State extremists.
Iran has suggested it freeze production at 3.975 million bpd, or about 200,000 barrels a day above current output, Bloomberg reported Monday.
Saudi Arabia countered with a proposal for Iran to cap output at 3.707 million.
While he stopped short of conceding Iran would freeze or cut its production, Iranian Oil Minister Bijan Namdar Zanganeh said his delegation was looking at "another framework".
"I am optimistic," he said.
However, should the oil ministers fail to agree a deal, experts expect prices to head south, perhaps to $40 or even $30.
In addition, it would deal a further blow to the already damaged credibility of the Organization of the Petroleum Exporting Countries.
- 'Hopeful' -
"Overall I am more hopeful today, much more hopeful," said Abhishek Deshpande, an analyst from Natixis bank.
Deshpande, who met the Iranian delegation early Wednesday, said Zanganeh now appeared "much more flexible, much more amenable".
"Once Iran agrees on a number with Saudi Arabia, that's it, Iraq will agree," he added.
Since OPEC's 14 members produce only a third of the world's oil, their ability to reduce the global supply glut and influence prices is limited.
But the cartel's efforts to convince other countries, not least Russia which pumps 11 million bpd, to reduce output as well have fallen flat.
Hit hard by the low prices and Western sanctions, Moscow has said it is ready to freeze output but not to cut it.
- Shot to bits -
While consumers might not welcome the more expensive fuel that a deal would bring, OPEC members' public finances have been shot to bits.
It has exacerbated an already desperate situation in Venezuela, and even hit fabulously wealthy Saudi Arabia hard.
The low crude price has also hit investment in oil facilities, raising the prospect of oil shortages and "shocks" further down the line, Emirati Energy Minister Suhail al-Mazrouei said.
Further downwards pressure on oil prices could come from the United States, with president-elect Donald Trump's promise to boost the domestic oil sector, leading to yet more crude flooding the market.
