Trump urges Saudi Arabia, OPEC not to cut oil production

Ivan Schwartz
Ноября 14, 2018

Crude futures got a boost early Monday when Saudi energy minister Khalid al Falih said Opec and its allies may need to head off another supply glut by cutting production by roughly 1 million barrels per day (Mmbpd). Oil producers will continue to evaluate the market data prior to the Vienna summit, "but if we need to trim production by one million bpd, we will do", Falih added.

At least three countries which are members of the Joint Ministerial Monitoring Committee consider that it's necessary to discuss the possibility of output cuts in 2019, according to delegates. The kingdom's energy minister flew into Baghdad for a meeting with Iraqi Prime Minister Adel Abdul Mahdi. On Sunday, it said the current situation "may require new strategies to balance the market".

The more Russia, Saudi Arabia, and their allies drive up prices now, the more profitable it will be for USA producers to boost production.

The Organization of Petroleum Exporting Countries and other suppliers are seeing signs of an emerging surplus in the USA, though it's too early to talk about cutting output, he said before a meeting to assess compliance with their pledged cuts in production.

The slide also comes during signs of a softer-than-expected impact from United States sanctions on Iran oil exports.

USA crude futures CLc1 settled down $4.24 a barrel, or 7.1 percent, to $55.69 a barrel.

In his speech at the start of the meeting, Falih said the recent sharp drop in prices had "surprised us". USA crude oil futures were trading around $60.80 per barrel, $1.50 higher than on Friday.

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In June, Saudi Arabia persuaded fellow oil producers to end 18 months of production cuts and pump more crude in response to falling output in Venezuela and Iran.

UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn't allow the market to become oversupplied.

Jakob Christensen, an analyst at Danske Bank A/S:"The combination of a stronger dollar and rising oil prices will create pressures, especially on those emerging markets that are oil importers and have large refinancing needs like Turkey, Argentina, India and South Africa". Crude on both sides of the Atlantic tumbled November 9 as the USA reported rising stocks and Washington granted waivers that lessen the impact of sanctions on Iranian exports. Russian Federation has given mixed signals about a cut, with Lukoil Chief Executive Vagit Alekperov saying on Monday that he did not see cuts being necessary.

The collapse in prices constitutes a stunning reversal from last month, when crude futures had hit almost four-year highs as traders braced for potential shortages once USA sanctions on Iran came back into force.

Commerzbank, Germany's second-largest lender, said Friday that oil producers must act to prevent prices tumbling.

Oil prices have since come under downward pressure from rising supplies, despite the new US sanctions on Iran. Brent plunged below $70 a barrel for the first time in six months, shedding 4 percent last week.

Iraq and Saudi Arabia agreed on Saturday to work together to stabilize oil markets, Iraq's Oil Ministry spokesman Asim Jihad said, without giving further details, Reuters reported.

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