Monday , June 14 2021

Saudi Arabia, others closer to cut oil cut ally

Abu Daabi – The drop in oil prices and the signs of global oversupply bring producers closer to the alliance to cut output.

Saudi officials said yesterday that the kingdom will cut its exports unilaterally next month, when a broader alliance of OPEC argued – but did not agree – to reduce collective production.

In the meantime, Russia, the world's largest producer, has sent mixed signals on whether it will continue to supply – after going through such matters with OPEC for more than two years.

"The Russians" have guesses, "said John Hall, chairman of the Alpha Energy consulting firm. "They like to be responsible."

Russian Oil Minister Alexander Novak said he was open to a cut in raw production if the coalition reached an agreement and stuck to any decision. But he also said that Russian production "reached a certain level where we have stabilized and we will change around this level in the coming months."

Saudi Arabia, Russia and other producers met here in the capital of the United Arab Emirates over the weekend to discuss whether reductions of about one million barrels a day may be needed next year, with an expected decision at the OPEC meeting next month.

Saudi Arabia, the executive leader of the Organization of Petroleum Exporting Countries, and Russia, which heads an alliance of producers outside the cartel, agreed to increase production at a meeting in June on the grounds that sanctions against Iran would cause shortages.

Three days after the sanctions came into effect on November 5, US oil entered a bear market. And since the end of September, when OPEC and the Russian-led partners met recently in Algiers, Brent crude oil, the global benchmark, fell more than $ 10 a barrel, To $ 60 per barrel – eight months.

Oil prices fell after the US said last week that it would allow eight countries to continue buying Iranian crude oil, as sales continued as US oil inventories rose again, driven by increased production and weaker demand. US commodity prices fell by 10 straight sessions by Friday, the longest decline since 1984.

In Russian, state oil companies have invested heavily in increasing oil production in recent years, making it difficult to reverse output. Fiscal discipline has meant the Russian federal budget will balance with $ 53 to oil volume in 2018 and is heading for even breaks of $ 44 within two years.

Many other OPEC representatives, who only a few months ago were concerned about a world oil-free market from Iran, are looking next year with a host of different concerns.

"There is consensus that there will be excess supply in 2019," Oman's oil minister Mohammed bin Hamad al-Romi told The Wall Street Journal after leaving the meeting on Sunday. He said that the coalition of producers will likely agree to cut supplies when they meet next month in Vienna.

A few hours earlier, Saudi Arabia's oil minister, Al-Falah, said the kingdom was already planning to cut its output, regardless of collective production. "You'll see," he said.

But Mr Palih said it was too early to say what the combined coalition would decide when it met next month. The group "will not shy away from making cuts but only if it is necessary," he added, adding that it should be sure "the surplus will continue into 2019."

Suhail al-Mazroui, the oil minister of the United Arab Emirates, who heads OPEC today, said that "a new strategy must be established." "Whether it's a cutting or something else, it's not going to be an increase in production," he added.

Saudi Arabia's cutbacks in exports, regardless of collective decision, came when a Saudi-funded think tank predicted a life without OPEC The Abdullah Abdullah Center for Oil and Research Studies examines a scenario in which the cartel will be dismantled, Which passed the Wall Street Journal.

"Think tanks think, we will not deter them from thinking," Mr. Falih said of Saudi Arabia. "We ask them to consider all the scenarios."

But the minister, who said that he speaks for the Saudi leadership, said "We believe that any professional research by [KAPSARC] Will show that a combination of extreme cooperation and volatility reduces will be best for the market.

Write to Summer said at [email protected], Christopher Elsie at [email protected] and Benoit Faucon at [email protected]

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