Saudi Arabia to cut oil output as producers discuss price dip

Lloyd Doyle
November 12, 2018

The rig count is an indicator that USA crude production, already at a record 11.6 million barrels per day (bpd), will increase further. "We need to look at 2019 with the view to keeping the markets balanced".

During a meeting in Baghdad, Iraq and Saudi Arabia's oil ministers also discussed an electricity grid connection between the two countries to meet Iraq's power needs, he said.

Opec secretary-general Mohammed Barkindo said at the meeting that conformity on the earlier output increases, which had been in place since May, was at 104 per cent for the month of October.

The sources said the discussions were not finalised as much depended on the reduction in Iranian exports.

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.

"Saudi Arabia has stepped in front of the oil market bears, proactively announcing they will reduce exports", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage in Oanda in Singapore.

OPEC and its allies will meet in Vienna on December 6-7 to decide on output policy for 2019.

The world's top oil exporter has been pumping 10.7 million bpd since October, he said.

Ahead of the meeting, he acknowledged that so far there was no new deal to cut production among OPEC and non-OPEC producers, who struck an agreement in late 2016 to cut output by 1.8 million bpd to tackle an oversupply crisis.

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

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

"We have to study all the factors", he said.

In his speech at the start of the meeting, Falih said the recent sharp drop in prices had "surprised us".

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

Saudi Arabia, the world's largest oil exporter, said on Sunday it would cut its shipments by half a million barrels per day in December due to seasonal lower demand. 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.

Other reports by Iphone Fresh

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