Cut Output By One Million Barrels Per Day, Saudi Minister Tells Countries

Daniel Fowler
November 12, 2018

Major oil producers meet in Abu Dhabi on Sunday to consider reverting to output cuts after a sharp slide in crude prices revived fears of a 2014-style crash.

Energy ministers from Russia, Oman, Kuwait and Algeria were among those who attended the one-day meeting.

Oil prices climbed on Monday as the world's biggest supplier Saudi Arabia announced plans to cut production in the face of fears of oversupply.

Brent crude dropped below United States dollars 70 a barrel on Friday for the first time since April while the New York's West Texas Intermediate (WTI) sank below USD 60 a barrel, a nine-month low.

Hook, who is also a special adviser to Secretary of State Mike Pompeo, threatened countries and port operators with possible U.S. penalties for facilitating Iranian ships' access to global waterways and port facilities.

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

There have also been signs that renewed USA sanctions on Iranian oil exports may have a softer-than-expected impact.

"While the Saudis said it's too early to go ahead with discussions on production cuts, Russian Federation said supply exceeding demand is a seasonal factor, signaling it's not necessarily keen to cut output", Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp. said, predicting "many twists and turns" before OPEC's next meeting in December.

The energy minister said: "There will need to be a reduction of supply from October levels approaching 1m barrels ..."

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The kingdom's energy minister, speaking after a meeting of Opec at the weekend, said the cartel believed that production would need to fall by almost 1m barrels per day (bpd) on October levels.

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

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".

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

"Iran's armed forces.are prepared today as in the past to protect our fleet of oil tankers against any threats so that it can continue to use marine waterways", said Rear-Admiral Mahmoud Mousavi, a deputy commander of the regular armed forces, according to the semi-official news agency ISNA.

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

Commerzbank, Germany's second-largest lender, said Friday oil producers must act to prevent a free fall of prices.

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