Abu Dhabi : Opec members have tentatively agreed to cut production to rebalance oil markets at a meeting in Vienna on Thursday - but they are yet to decide on the volume of the cut and will wait for a final decision from non-Opec producer Russia.

Russia, which is coordinating with Opec (Organisation of the Petroleum Exporting Countries) since December 2016 on output cuts, is expected to announce its decision on Friday on its reduction. The international benchmark, Brent, was down 3.49 per cent at $59.41 per barrel at 7:47pm UAE time, while US crude West Texas Intermediate was trading at $50.56, down 4.41 per cent.

Brent fell by 5 per cent earlier during the day after Opec signalled it may agree to a smaller cut than had been expected. Saudi Arabia’s energy minister Khalid Al Falih said before the meeting that Opec and its allies would be happy with a cut of just 1 million barrels per day.

“We’re looking for a sufficient cut to balance the market, equally distributed between countries,” Al Falih had said ahead of an Opec meeting in the Austrian capital, Bloomberg reported. “A cut of about 1 million barrels a day from the whole group should be adequate”, and that “certainly we don’t want to shock the market.”

Markets were expecting about 1.4 million barrels per day of reduction. Output cuts are necessitated following a drop in oil prices due to higher production from Saudi Arabia, Russia and other countries and the granting of waivers to eight countries from Iran sanctions imposed by the US administration in November.

From more than $85 per barrel in October oil prices, fell to less than $60 as supply continued to increase and outpace demand. Suhail Mohammad Al Mazrouei, UAE Minister of Energy and Industry and President of the Opec Conference, also raised concerns about higher supply growth in 2019.

“As we look forward to 2019, we see a new set of challenges. This includes the general consensus that prospects point to higher supply growth than expected global requirements and there are signs of a potential slowdown in demand,” he said in his opening speech at the conference.

On the other hand, US President Donald Trump continues to put pressure on Opec to keep pumping more for lower oil prices. “Hopefully Opec will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices,” he tweeted on Wednesday.

Commenting on the Opec meeting, analysts said that there is still a long way to go and the discussions between Opec and its allies are still in the initial stages.

“President Trump’s ongoing oil market intervention will continue to test Opec and its allies’ tolerance,” said Ehsan Khoman, Head of MENA Research and Strategy at MUFG Bank, Ltd. “Heading into the last day tomorrow, we view that the group will focus its endeavours on its “Opec+ First” policy, and thus prioritise curbing the current oversupply in the market, above entertaining calls from President Trump to maintain current production levels.”

A 1 million barrel a day cut should be OK

“One million bpd may disappoint many - but should the cut be from a September or October baseline, rather than November, the net impact would be sufficient to limit storage builds,” Greg Sharenow, executive vice-president for Pimco, said on the sidelines of the Opec meeting.

“It is unlikely to spark a meaningful price rally, but also will not be so dire either. In many respects it is the middle road, which may be the optimal solution,” said Sharenow, who helps manage a $15 billion commodities fund at the $1.77 trillion U.S. investment management firm.