Published: Wed, November 14, 2018
Money | By Bruce West

Saudi Arabia, Russia Discussing Possible Oil-Production Cuts

Saudi Arabia, Russia Discussing Possible Oil-Production Cuts

His tweet posted just minutes after a Fox Business Network segment in which energy analyst Phil Flynn said OPEC leaders were angry Trump had "duped" them into raising production ahead of the Iranian sanctions. The cut represents a reduction in global oil supply of about 0.5 percent.

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

Saudi Arabia said OPEC and its allies should reverse about half the increase in oil output they made earlier this year as fears of shortages are supplanted by concerns about oversupply and collapsing prices. Energy ministers from Oman, Kuwait and Algeria were among others who attended the one-day meeting. "Oil prices should be much lower based on supply!"

US West Texas Intermediate (WTI) crude oil futures were at $59.06 per barrel at 0115 GMT, down 87 cents, or 1.5 per cent from their last settlement.

Falih said the U.S. sanctions had removed less oil from the market than expected because of the waivers.

They call it "production adjustments", but in reality most major oil extracting countries agreed Sunday new strategies regarding crude output were needed in light of the surplus accrued over the past few months.

Suheil al-Mazrouei, energy minister of the host country UAE, hinted that producers are preparing to cut output. Russia, by contrast, is in a more comfortable position.

USA sanctions against Iran had removed less oil than expected from the market, Falih said.

Against the background of recent statements by Saudi Arabia, the world prices for oil on Monday morning jumped more than 2%.

OPEC and non-OPEC exporters must stick to a consistent message if they are to avoid exacerbating wild swings in the oil market, Russian Energy Minister Alexander Novak said Sunday.

Saudi Arabia has been pumping 10.7 million bpd since October, Falih said.

"One thing that is abundantly clear, OPEC is in for a shale shocker as U.S. crude production increased to a record 11.6 million barrels per day and will cross the 12 million threshold next year", Innes said.

While there are already signs that there is oil glut in the United States, Al-Falih was more circumspect, stating that it was still too early to talk about coordinated oil production cuts in the OPEC+ group.

"The US had contributed to volumes and there was an "inventory build-up" which needed adjustment", Mr Falih said.

U.S. crude oil stockpiles in the week ending November 2 increased by 5.8 million barrels, or about 3 percent above the five-year average for this time of year, according to the U.S. Energy Information Administration (EIA).

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".

Commerzbank, Germany's second-largest lender, said Friday that oil producers must act to prevent prices tumbling. "Meanwhile, a Saudi. output cut for December has helped boost ailing oil prices".

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