ABU DHABI-OPEC is likely to agree on an oil production cut when it meets next month in Vienna, said the…
ABU DHABI-OPEC is likely to agree on an oil production cut when it meets next month in Vienna, said the oil minister in Oman on Sunday after Saudi Arabia confirmed that it would cut its own oil products next month and Russia signaled that it could accompany.
“There is a consensus that there will be overcrowding in 2019,” said Oman oil minister Muhammad bin Hamad al-Rumhy to the Wall Street Journal after the joint ministerial meeting of the Monitoring Committee in Abu Dhabi. While Oman is not a member of OPEC, it is part of its production decisions.
The news comes after Khalid al-Falih, Saudi Arabian oil ministers said the Kingdom was ready to reduce production while Russia left the door open to opportunity.
Saudi Arabia, Russia ̵
1; the world’s largest oil exporters – and a few other manufacturers met in Abu Dhabi to investigate whether 1 million barrels per day would be needed next year.
Speaking before the meeting, Mr. Al-Falih that the Saudi Arabian production cut was imminent.
“December nominations are 500,000 barrels a day less than they were in November.
Russia, OPEC’s largest external allies, had been expected to oppose a new decline since the state oil companies have invested heavily in a production disaster.
However, the country’s oil minister Alexander Novak does not rule out a fall next month. Novak said he was “theoretically” open to raw production cuts, if the coalition reached agreement and would comply with all the decisions taken.
The association of 25 producers in the organization of Oil exporting countries and outside the group will decide next month in Vienna.
But Falih said it was too early to say what would happen at the meeting. “We will not be sorry to do a cut but just about it is necessary, “he said, adding that the group needed to be sure” the offer continues until 2019. “
He added that such a collective decision t was still very uncertain. “Indeed, we see some signs of [a persistent glut] coming from the United States [but] We have not seen the signs globally,” he said.
Any cuts to production come as oil into a bear market on Thursday. Friday’s close marked the 10 consecutive sessions of losses, the longest since July 1984.
Complicative OPEC’s decision-making is the return of US sanctions against Iran and Washington to decide to grant temporary exceptions to eight countries that would allow them to buy oil from the Islamic Republic.
In addition, Venezuela told oil minister Manuel Quevedo last Sunday that his country plans to increase production by half a million barrels a day as part of a capacity disaster driven by Chinese funding.
However, Helima Croft, the primary commodity strategist at Canada’s RBC, said Venezuela would unlikely increase production even with a cash injection in emergencies. Many oil workers leave their position or “go hungry. The infrastructure is in complete decline,” she said.
The Wall Street Journal reported last week that a Saudi-funded tanker, King Abdullah Petroleum Studies and Research Center, has studied a scenario where OPEC would loosen. “Thinking tanks like thinking. We will not deter them from thinking,” said Saudi Arabia, Mr. Falih. “We ask them to consider all scenarios.”
However, the minister, who said he spoke for Saudi leadership, said ” We believe that any professional study of [KAPSARC] will show that the combination of cooperation and mitigating extreme volatility will be the best for the market.