Saudi minister calls for 1 mln bpd global oil output cut

Ivan Schwartz
November 12, 2018

Oil prices have shed a fifth of their value over the past month due to oversupply and signs of a softer-than-expected impact from United States sanctions on Iranian crude exports.

Mr Al Falih expressed concern, however, over the recent downward turn of the oil markets, which had through the summer held about $80 per barrel, only to fall to $69 on Friday, after the US Energy Information Administration reported higher US production figures and the White House granted waivers to eight of Iran's top oil buyers.

Major oil producers said on Sunday that crude supply next year would outstrip demand and signalled they may agree to production cuts when OPEC meets next month in Vienna. He said the committee were reviewing the market and would draw up a plan to deal with the prospect of higher supply in 2019.

Hook had also said the sanctions had already cost Iran billions of dollars in oil revenue since May, but Iranian vice-president Eshaq Jahangiri said Iran had sold as much oil as it needed to.

With oil wallowing in a bear market, OPEC and its allies gathered in Abu Dhabi on Sunday to weigh production cuts.

Khalid al-Falih's comments follow a meeting in Abu Dhabi at the weekend, where the Organisation of Petroleum Exporting Countries (OPEC) and its allies started laying the groundwork to cut supply in 2019, reversing an nearly year-long expansion.

"A new strategy needs to be formed, whether it's cuts or something else, it's not increasing production definitely".

Russian Federation is now pumping about 10,000 to 20,000 barrels a day below October levels, and demand from customers is "fairly stable", Novak said.

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Since then, OPEC production has risen 820,000 bpd since May, according to the latest S&P Global Platts OPEC survey.

When asked about the possibility of an output cut, he insisted it was "premature to talk about a specific action".

Last week, higher U.S. energy stockpiles drove WTI crude to its longest losing streak in more than 30 years, while Brent crude dropped below $70 a barrel for the first time since April.

Al-Falih said that demand for Saudi crude was weaker for the first time since the kingdom started boosting production in the May-June period.

"Ideally, we don't like to cut", Al-Falih said.

The UAE's Mazrouei said the goal of OPEC and non-OPEC cooperation was to strike a balance in the market.

Producers implemented large cuts starting at the beginning of 2017 and managed to push up oil prices from below $30 a barrel to over $85 in October, strongly improving their revenues.

Several analysts said oil prices were likely to turn bullish again. "I think those reports are going to be even weaker because they will have to adjust for the increase in US production", Jakob said.

Other reports by GizPress

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