Falih: Saudi Arabia to cut December oil output by 500000 bpd

Cornelia Mascio
Novembre 12, 2018

Saudi Arabia, the world's top crude exporter, said Sunday it will cut oil output from next month, as major producers held a key meeting to discuss shoring up sliding prices.

"The Kingdom's crude exports for December will be 500,000 bpd lower than November", Saudi Energy Minister Khalid Al-Falih told reporters at the meeting in Abu Dhabi.

Oil prices rose by more than one percent on Monday after top exporter Saudi Arabia announced a December supply cut, a measure likely aimed at halting a market slump that has seen crude decline by 20 percent since early October. "I think those reports are going to be even weaker because they will have to adjust for the increase in US production", Jakob said.

Russian Federation stated on Sunday that it did not believe that the oil market would face a probability of an oversupply next year.

West Texas Intermediate crude also dropped to a nine-month low, below $60 a barrel.

There have also been signs that renewed U.S. sanctions on Iranian oil exports may have a softer-than-expected impact. He said the committee were reviewing the market and would draw up a plan to deal with the prospect of higher supply in 2019.

They would therefore consider "options on new 2019 production adjustments, which may require new strategies to balance the market", they said in a statement at the end of the meeting.

"The recent drop in oil prices reflects a combination of factors".

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

While Riyadh has chose to lower production, the rest of the attendees did not come to a consensus on the matter, according to Falih.

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

"Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the USA, more than compensating for lost Iranian barrels", Forex.com analyst Fawad Razaqzada told AFP.

U.S. energy firms had last week added 12 oil rigs in the week to November 9 looking for new reserves, bringing the total count to 886, the highest level since March 2015, Baker Hughes energy services firm had said on Friday.

"In 2019 there will be a growth in supply so we're looking at a different strategy than the 100 per cent conformity in 2016", UAE energy minister and outgoing Opec president Suhail Mazrouei said, after the group's Joint Ministerial Monitoring Committee (JMMC) meeting in Abu Dhabi.

He said the market sentiment has shifted from one of fearing shortages to one anxious about oversupply.

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.

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

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