A powerful group of oil producing countries could end up cutting production by about 1 million barrels of crude oil per day, the Wall Street Journal reported Tuesday.
The Organization of Petroleum Exporting Countries is set to meet Wednesday at an energy conference in Algiers, Morocco, and a production cut is reportedly on the table, the Journal reported. The discussion in Algiers is meant to set up more formal talks when the cartel meets again in November.
According to the Journal’s report, Saudi Arabia would cut production 400,000 barrels per day and the Iranians would cap their oil production at 3.7 million barrels per day under one proposal.
Many OPEC countries want to see a cut or freeze in production in order to cause the price of oil to rise. The dropping price of crude oil in recent years has crushed the economies of some member countries, especially Venezuela, whose citizens have rushed across the border to Colombia in order to find food.
However, some countries, such as Saudi Arabia, have resisted cutting production in order to maintain their market share over United States energy producers. The decision by OPEC to keep production high in recent years has helped squeeze the American oil industry, causing companies to layoff thousands of workers and close drilling sites as prices plummeted.
But the Journal reported that there is a standoff looming between the Saudis and the Iranians.
Iran re-entered the oil market earlier this year after Western countries lifted sanctions placed on the Islamic Republic as a part of the Iran nuclear deal. The Iranians will likely reject the idea of capping their oil production below their stated goal of 4 million barrels per day, the Journal reported.
“In the room where the Saudis and Iranians meet, there will always be burning-hot political tensions,” one of the people familiar with the plan told the Journal.
The group meets formally on Nov. 30 in Vienna. The Journal reported that the group’s leader, Secretary-General Mohammad Bakindo, left open the possibility of a formal meeting taking place on Wednesday if there is consensus around the deal.
