OPEC moves to combat plummeting oil prices

Andrew Cummings
November 12, 2018

Saudi Arabia expressed the need for oil producers to cut 1 million barrels a day from October levels and announced fewer shipments from next month, as OPEC and its allies began laying the groundwork to reduce oil supply in 2019, reversing an nearly year-long expansion.

Russia's Novak said it's "hard to say" if oil markets will be over-supplied next year.

But Russia appears to need more convincing that it should be cutting production again.

"There is no consensus yet among oil producers about cutting production", Saudi Energy Minister Khalid Al-Falih said at the meeting of their Joint Ministerial Monitoring Committee.

Energy ministers from Russia, Oman, Kuwait and Algeria were among those who attended the one-day meeting. Crude prices have dropped approximately one-fifth since early October.

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.

The Saudi announcement boosted Brent oil price from some $69/bbl to above $71/bbl Monday - as investors deemed a 0.5-percent cut to the total global supply as easing the concerns of overproduction.

The outlook for oil, a key source of revenue for Russian Federation and Saudi Arabia, is adding a fresh twist for a market already obsessed with Federal Reserve tightening and the U.S.

The UAE's energy minister, Suhail al-Mazrouei, said balancing the market would "require changes in the strategy" of producers.

The slide also comes during signs of a softer-than-expected impact from United States sanctions on Iran oil exports.

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

The remarks came days after Brian Hook, the U.S. special representative for Iran, warned Iran's business partners to "rethink your decision" to buy Iranian oil in the wake of Washington's "toughest" sanctions against Tehran.

The next OPEC and non-OPEC ministerial meeting will convene in Vienna on December 4, just ahead of the OPEC summit.

The proposed reduction is from October production levels, Falih said.

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.

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

"This relief gives Iraq time to start taking steps towards energy independence", a video published on the US Embassy in Iraq's official Facebook page said.

"We'll make sure we'll steer the global oil markets ... to make sure we don't jerk the oil markets into swinging either side", said Mr Al Falih.

Other reports by iNewsToday