OPEC begins debate on oil cuts

Organization of the Petroleum Exporting Countries (OPEC) meeting began on Wednesday in Vienna. Oil producers will try to agree on a production cut to bolster prices which have plunged by more than half since 2014, with Iran and Iraq resisting pressure from Saudi Arabia to participate fully in any action, as reported by Reuters.

On Tuesday, Iran has written to OPEC saying it wanted Saudi Arabia to cut production by as much as 1 million barrels per day (bpd), much more than Riyadh is willing to offer.

The 14-country group, which accounts for a third of global oil production, made a preliminary agreement in Algiers in September to cap output at around 32.5-33 million bpd versus the current 33.64 million bpd to prop up oil prices, which have halved since mid-2014.

OPEC said it would exempt Iran, Libya and Nigeria from cuts as their output has been crimped by unrest and sanctions.

Brent crude rose 1.5% on Wednesday to more than $47 a barrel after heavy losses a day earlier.

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

Asian equity markets were mixed, with Chinese shares falling, Japan’s Nikkei flat, Hong Kong’s up and Korea’s Kospi index also ending higher.

Wednesday brings a blast of economic data, including job figures from Germany, Eurozone inflation, provisional CPI from France and Italy, the ADP national employment report and personal income and outlays from the US.

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