ABU DHABI (Reuters) – Saudi Arabia intends to reduce oil supply to world markets by 0.5 million gatherings a day in December, says its energy minister on Sunday, as OPEC's power faces uncertain prospects in it Efforts to stimulate other producers to agree co-ordinating output to break.
FILE PHOTO: Shaybah Saudi Aramco oil field production facility is found in the Vacant Quarter, Saudi Arabia, May 22, 2018 .. REUTERS / Ahmed Jadallah / File Photo
Khalid al-Falih told reporters that Saudi Aramco's customer crude oil nominations would fall from 500,000 pd in December against November due to the less seasonal demand. The cut represents a drop in a global oil supply of around 0.5 per cent.
Saudi Arabia has increased the output by around 1 million pounds this year under pressure from US President Donald Trump and countries that use others to help balance the market to compensate for lower supplies from Iran due to sanctions in the United States.
But as Iranian customers have given generous omissions to continue to buy crude, concerns about market overlap grew and oil prices dropped below $ 70 per barrel of $ 85 a barrel Friday in October.
"We have been increasing the production in response to demand," said Valley to reporters in Abu Dhabi before the OPEC market and OPEC market meeting, not OPEC.
"I will tell you a piece of news that (en) December's nominations are 500,000 barrels less than November. So we see part of it's ending later, part of it is to maintain and keep … so we'll be smaller vessels in December than we are in November. "
Saudi Arabia is discussing a proposal that could see OPEC and non-OPEC oil producers cut output of up to 1 million pd, two sources told Reuters earlier on Sunday, as the leading oil exporter in the world with prices bras drop
He said the sources that any such method would depend on factors including Iran's exports level after the US imposed penalties on Tehran but gave Iran's best oil buyers feedback to continue to buy oil.
Russia's participation was key to helping OPEC rebalance the market during 2017-18. But the Russian Energy Minister, Alexander Novak, said Sunday that it was uncertain that the market would be overstated next year.
He said the overlap over the coming months would be driven on a termly basis, by mid-2019 the market could be balanced again and could even call more than the supply.
IRAN WAIVERS SURPRISE
Riyadh was surprised by the invoices issued by Washington to the main Iranian customers such as China and India, a shift that hit oil prices, telling Reuters about at least three industry and OPE sources.
Saudi Arabia now wants to act to prevent further slippage in prices and leads to discussions on cutting oil output next year, the sources said.
Under a bargain that ended at the end of the year, OPEC and non-OPEC producers agreed to cut output by around 1.8 million pd.
But producers stopped to break more and therefore it was agreed in June to limit their discounts more than their output targets, thus removing around 1 million pd in output.
OPEC and allies will meet in Vienna on December 6-7 to determine an output policy for 2019.
"There is a general discussion about this (cut). But the question is how much need to be reduced by the market," said one of the sources in Abu Dhabi on Sunday.
"No-one was expecting the output. Saudi Arabia wants to give a floor under at least oil prices. Nobody wants a free discount in prices," added the source.
Kazakh's deputy minister, Magzum Mirzagaliyev's energy told reporters in Abu Dhabi, he understands that Saudi Arabia suggests using August-October output levels as a baseline for cutting cuts.
Rain did not refuse the possibility of breaking next year, but also said that he would like "to move into 2019 with minimum interventions."
"I believe, ideally, we do not like to cut. Ideally, I would like to keep the market … complementary and comfortable free. Only if we see continuous harm we will cut it, and pretty obvious, we see some signs of what's coming out of the US, we have not seen the signs globally, "he told reporters.
Brent LCOc1 raw Friday decreased by 47 cents, or 0.7 percent, to settle $ 70.18 in bargain. He lost around 3.6 per cent on the week and has dropped more than 15 per cent this quarter. [O/R]
Washington gave 180 day articles to eight Iranian oil buyers – China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey. This group takes as much as three quarters of Iranian sea oil exports, trade data shows.
The US administration has pledged to reduce Iran's oil exports to zero and Trump has put pressure on Saudi Arabia to raise output to cool the market.
Iran's raw exports could reach just over 1 million pd in November, about a third of the mid 2018 peak. But traders and analysts say that the figure could rise from December as importers use their omissions.
Falih said last month that the kingdom would pump 11 million pd in November, from 10.7 million pd in October. He also said that interventions to reduce oil stocks may have to be increased after recent months.
Additional reports by Maha El Dahan, Stanley Carvalho, Tuqa Khalid and Nafisa Eltahir; Edited by Jason Neely and Matthew Mpoke Bigg