Saudi Arabia, Iraq to work for oil market stability

12 November, 2018, 17:59 | Author: Brooke Harris
  • Saudi to cut oil exports by 500,000 barrels per day in December

Saudi Arabia's energy minister said oil-producing nations should cut output by one million barrels per day to re-balance the market.

"We want to enter 2019 with a minimum amount of stocks", Falih said.

Oil prices rose by about one per cent on Monday after top exporter, Saudi Arabia, announced a cut in supply for December.

He also did not clarify whether the exemptions to production cuts extended to Iran in 2016 after its re-entry into the global oil markets, following the lifting of nuclear-related sanctions, would be extended this time after the imposition of United States sanctions.

"We need not overreact" to falling prices, Mazrouei said, adding that crude was a dynamic market.

"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.

"Oil-importing emerging economies' currencies would likely react negatively to a cut in OPEC output given Iranian oil exports are already likely to wane over time under the impact of USA sanctions", said Mansoor Mohi-uddin, the Singapore-based head of foreign-exchange strategy at NatWest Markets.

The Saudi oil minister Khalid al-Falih also met Iraqi Prime Minister Adil Abdul-Mahdi.

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

Meeting to examine how to curb a sharp slide in oil prices, the producers said they "reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements".

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

The UAE's Mazrouei said the goal of OPEC and non-OPEC cooperation was to strike a balance in the market. The producers need prices that are high enough to balance their budgets and low enough to stimulate demand and shield themselves from attacks from the White House, all while they contend with wild swings in supply as sanctions hit OPEC member Iran.

He said market sentiment had shifted from fears of shortages to worries about oversupply.

Through large production cuts starting at the beginning of 2017, they managed to push up oil prices from below Dollars 30 a barrel to over USD 85 a barrel in October, strongly improving their revenues.

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

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