VIENNA — With Saudi Arabia declaring a “critical day” for OPEC, oil ministers of the cartel moved closer Wednesday to end infighting and reach an agreement to cut output for the first time in eight years.
The price of oil rallied as chances grew that the 14-nation group will agree on individual quotas for its members — the international benchmark for crude oil soared $3.22 to $49.60 a barrel.
An OPEC decision to cut production could have a lasting impact on consumers, as oil price increases feed into the cost of car fuel, heating and electricity.
An agreement appeared distant as late as the eve of the cartel’s meeting due to a rivalry between Saudi Arabia, OPEC’s top producer, and Iran, whose struggle for dominance in the Mideast is also playing out in the Organization of the Petroleum Exporting Countries.
The Saudis have been hesitant to shoulder the lion’s share of a cut, while Iran has resisted reducing its own production.
It argues it has yet to recover its output levels hit by years of sanctions.
But as ministers headed into their closed decision-making session, comments from both sides suggested a compromise was near.
“We are serious about implementing the Algiers agreement,” said Khalid Al-Falih, referring to the September meeting that laid out the contours of a cutback the ministers needed to sign off on Wednesday.
That agreement aims to pare up to 1.2 million barrels a day off total OPEC production, which is now over 33 million barrels a day.
If implemented, it would send a signal that the cartel, which accounts for about a third of the world crude output, is once again focused on regulating supplies and prices after years of inaction that dented its image as the arbiter of the market.
Any lasting effect on oil prices is unclear, even if cuts are agreed on. Russia, a major non-OPEC oil producer also must join in, and with the world economy feeble and oversupplied with oil, a bounce may be only temporary.
Still, even a symbolic sign that OPEC is back in the business of regulating the market would be significant, something Al-Falih alluded to as the meeting convened.
“Today is a critical day for us in OPEC,” he told reporters.
“I am relaxed and hopeful for the best,” he added.
He expressed hope that non-OPEC producers would “also contribute and reciprocate” with oil cuts or freezes of their own in case Wednesday’s meeting was successful.