Economy

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

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

OPEC and Russian Federation are set to discuss oil production cuts again, less than a month after both Alexander Novak and Khalid al-Falih assured markets they will ramp up production to offset any supply losses after USA sanctions against Iran came into effect.

The Organization of the Petroleum Exporting Countries (OPEC), which is led by Saudi Arabia, agreed in June with a bloc of 10 petroleum-producing nations led by Russian Federation, to increase global supply by one million bpd.

"Targeting 100 per cent [compliance] is no longer recommended for the ministerial conference", said Mr Al Mazrouei.

Saudi energy minister Khaled Al Falih however would not be drawn into a discussion on whether the cuts would be made using baseline output registered for the month of October or November. "We need to look at 2019 with the view to keeping the markets balanced".

The 14 members of the Organisation of Petroleum Exporting Countries, which include Saudi Arabia, alone pump over a third of global crude supply.

"A new strategy needs to be formed... whether it is a cut in production or something else, but it will not be an increase in production", he said.

Brent crude dropped below $70 a barrel on Friday for the first time since April, while the New York's West Texas Intermediate sank below $60 a barrel, a nine-month low.

Oil prices have shed a fifth of their value over the past month due to oversupply and signs of a softer-than-expected impact from United States sanctions on Iranian crude exports. He said the committee were reviewing the market and would draw up a plan to deal with the prospect of higher supply in 2019.

"If they fail to signal any intention to reverse the latest increase in production, oil prices threaten to slide further", the bank said in a note.

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

Asked by reporters in Abu Dhabi if the market is in balance, Saudi Energy Minister Khalid Al-Falih said: "We will find out".

He also attributed the sharp drop in prices to "microeconomic uncertainties", and signs of a build-up in crude inventories.

The rig count is an indicator that United States crude production, already at a record 11.6 million barrels per day (bpd), will increase further.

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



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