OPEC meets, tries to salvage deal limiting oil output

OPEC was trying on Monday torescue a deal to limit oil output as tensions grew among theproducer group and non-OPEC member Russia, with top exporterSaudi Arabia saying markets would rebalance even without anagreement.

A gathering of OPEC experts failed to reach a compromise onhow exactly the Organization of the Petroleum ExportingCountries should reduce production when it meets on Nov. 30,according to several sources briefed on the matter.

After more than nine hours of talks, Iran and Iraq continuedto insist on higher output numbers, said the sources, who werenot allowed to speak publicly about the matter.

Meanwhile, the Algerian and Venezuelan oil ministers weretravelling to Moscow on Monday in a final attempt to persuadeRussia to take part in cuts instead of merely freezing output,which has reached new highs in the past year.

Doubts follow September agreement

In September, OPEC, which accounts for a third of global oil production, agreed to cap output at around 32.5-33.0 million barrels per day versus the current 33.64 million barrels per day to prop up oil prices, which have more than halved since mid-2014.

The meeting on Nov. 30 was expected to rubber-stamp thatdeal, with Russia and some other non-OPEC producers such asAzerbaijan and Kazakhstan also contributing.

But doubts emerged in recent weeks as OPEC's No. 2 and 3 producers, Iraq and Iran, expressed reservations about themechanics of output reductions and Saudi Arabia voiced concern about Russia's willingness to cut.

On Friday, OPEC cancelled an experts meeting with non-OPECproducers scheduled for Nov. 28 after Saudi Arabia said theorganization needed to sort out its differences first.

Over the weekend, Saudi Energy Minister Khalid al-Falih saidoil markets would rebalance even without an output-limitingpact. He had previously said Riyadh was keen for a deal.

Russia, which like Saudi Arabia depends heavily on oilrevenues, said on Monday it remained keen to coordinate actionwith OPEC but refrained from stating whether it was prepared tocut output.

The Kremlin said President Vladimir Putin spoke to IranianPresident Hassan Rouhani and both leaders highlighted "the importance ofOPEC's efforts to cap production as a key measure to stabilizeglobal oil markets".

Oil prices fluctuate on uncertainty

Doubts about OPEC's ability to deliver promised cuts sentBrent crude down twoper cent initially on Monday to lessthan $47 a barrel.

Prices later recovered to trade up 2.5 percent after Iraq'soil minister said he remained optimistic that a deal could beclinched on Wednesday.

Some analysts including Morgan Stanley and Macquarie havesaid oil prices will correct sharply if OPEC fails to reach adeal, potentially going as low as $35 per barrel.

OPEC ministers started arriving in Vienna on Sunday for thegroup's regular twice-yearly talks but Saudi Arabia's Falih wasnot expected to land before Tuesday evening, leaving little timefor traditional pre-meeting discussions with peers.

Iranian semi-official news agency MEHR published aneditorial on Sunday accusing Saudi Arabia of declaring a new"war on oil prices" and reneging on its promises to limitoutput.

The tone contrasted with Iranian news agencies' more upbeatcoverage of OPEC's informal meeting in September in Algeria,when the initial deal was reached.

As prospects for a deal on Wednesday faded, some veteranOPEC players urged the group to do its utmost to achieve thefirst output-limiting deal since 2008 in order to stay relevant.

"OPEC needs to wake up instead of playing a game of who willcry first," said former Qatari energy minister and OPEC president Abdullah al-Attiyah.