Saudi Arabia to cut oil output as producers discuss price dip

Roman Schwartz
November 12, 2018

He also did not clarify whether the exemptions to production cuts extended to Iran in 2016 after its re-entry into the global oil markets, following the lifting of nuclear-related sanctions, would be extended this time after the imposition of United States sanctions. "We need to look at 2019 with the view to keeping the markets balanced".

The meeting, which will also be attended by the oil ministers of Kuwait, Venezuela and host nation the UAE, is not due to make decisions but will most likely send signals.

"A new strategy needs to be formed... whether it is a cut in production or something else, but it will not be an increase in production", he said.

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 USA sanctions on Iranian crude exports.

Meeting in Abu Dhabi to examine how to curb a sharp slide in oil prices, the producers said they "reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements".

Saudi Arabia will cut its December oil output by 500 barrels per day in comparison to November's output, the kingdom's Energy Minister Khalid al-Falih said at the meeting of the Joint Ministerial Monitoring Committee. The cut represents a reduction in global oil supply of about 0.5 percent. "I think those reports are going to be even weaker because they will have to adjust for the increase in US production", Jakob said.

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Saudi Arabia, the world's top oil exporter, has been pumping 10.7m bpd since October, according to Falih.

"There is no consensus yet among oil producers about cutting production", Falih said at the gathering.

It was "premature to talk about a specific action", he told reporters, asked about the possibility of an output cut to support sliding prices.

The Organization of the Petroleum Exporting Countries (OPEC), which is led by Saudi Arabia, agreed in June with a bloc of 10 petroleum-producing nations led by Russian Federation, to increase global supply by one million bpd.

"We have to study all the factors", Falih said. After dozens of media reports claimed that Iranian oil exports had been falling sharply and steadily, data now suggests the fall has been less steep-a fact immediately weighing on oil prices.

Al-Falih last month said there could be a need for intervention to reduce oil stockpiles after increases in recent months.

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