ABU DHABI (Reuters) – Saudi Arabia plans to reduce oil supply to world markets by 0.5 million barrels per day…
ABU DHABI (Reuters) – Saudi Arabia plans to reduce oil supply to world markets by 0.5 million barrels per day in December, Energy Minister said on Sunday, when OPEC power faces uncertain prospects in persuading other producers to agree to a coordinated production decline.
PHILPHOTO: Flames are seen at the production facility in Saudi Arabia’s oilfield Shaybah in the empty quarter, Saudi Arabia on May 22, 201
8. REUTERS / Ahmed Jadallah / Filfoto
Khalid al-Falih told reporters that Saudi Arabia’s customer oil oil nominations would fall by 500,000 GDP in December compared to November due to the season’s lower demand. The clip represents a decrease in global oil supply of about 0.5 percent.
Saudi Arabia has increased production by barely 1 million bpd this year under pressure from US President Donald Trump and other consumer countries to balance the market to compensate for lower deliveries from Iran due to US sanctions.
But since Iran’s customers were given generous exceptions to continue buying raw, concerns about market surpluses and oil prices fell to under $ 70 a barrel on Friday from $ 85 a barrel in October.
“We have increased production as a result of demand,” Falih told reporters in Abu Dhabi before a joint OPEC meeting with OPEC Monitoring Committee.
“I’ll tell you some news that’s (it) December nominations are 500,000 barrels smaller than November. So we see a tapered part of it’s the turn of the year, part of it’s maintenance …. so we’re coming be shipping less in December than we are in November. “
Saudi Arabia is discussing a proposal that saw OPEC and OPEC oil producers reduced production by up to 1 million bpd, two sources told Reuters earlier on Sunday, when the world’s premier oil producer cuts a decline in raw prices.
The sources said such a deal would be due to factors that include the level of Iranian exports after the United States imposed sanctions against Tehran, but granted Iran’s best oil buyers a derogation to continue buying oil.
Russian participation was the key to helping OPEC to balance the market in 2017-18. However, Russian energy minister Alexander Novak said on Sunday that he was not sure that the market would be overcrowded next year.
He said that over-supply for the next few months would be seasonal, but by mid 2019 the market could be balanced again and demand could outperform supply. Riyadh was surprised by the exceptions granted to Washington’s main customers such as China and India, a move that hit oil prices, at least three industries and OPEC sources told Reuters.
Now Saudi Arabia wants to act to prevent further price falls and leading discussions about reducing oil production next year, says the sources.
Under an agreement that would expire at the end of the year, OPEC and non-OPEC producers agreed to reduce production by approximately 1.8 million bpd.
But the producers stopped cutting more and then agreed in June to limit their reductions with more than their production targets, which means recovering about 1 million bpd in production.
OPEC and its allies will meet in Vienna on 6-7 December to decide on production policy for 2019.
“There is a general discussion about this (cut). But the question is how much is needed to reduce on the market, says one of the sources in Abu Dhabi on Sunday.
“No one expected the exception. Saudi Arabia wants at least to put a floor below the oil price. No one wants a free price drop, “added the source.
Kazakh’s Deputy Energy Minister Magzum Mirzagaliyev told reporters in Abu Dhabi that he understood that Saudi Arabia proposes that the August-October output levels be used as the starting point for determining cuts.
Falih excludes not the possibility of an average next year, but also said he would like to “move in to 2019 with the least intervention.”
“I think we’d rather not cut. Ideally, we like to keep the market … liberally delivered and comfortable. We will only cut if we see a persistent glut that appears and obviously we see some signs of this coming from the United States, we have not seen the signs globally, “he told reporters.
Brent LCOc1 raw on Friday Fell 47 cents, or 0.7 percent, to settle at $ 70.18 per barrel. It lost about 3.6 percent per week and throws more than 15 percent in the quarter. [O/R]
Washington gave 180 days to eight Iranian oil buyers – China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey. reduce Iranian oil exports to zero and Trump has put pressure on Saudi Arabia to boost production to cool the market.
Iran’s raw exports could fall to slightly more than 1 billion bpd in November, about one third of the mid-2018 peak. But business experts and analysts say that the figure may rise from December when importers use their exceptions.
Falih said last month that the nation would pump 11 million bpd in November, up from 10.7 million bpd in October. He also said that there could be a need for intervention to reduce oil stocks after increases in recent months.
Further reporting by Maha El Dahan, Stanley Carvalho, Tuqa Khalid and Nafisa Eltahir; Editing Jason Neely and Matthew Mpoke Bigg
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