Falih: Saudi Arabia to cut December oil output by 500000 bpd

  • Falih: Saudi Arabia to cut December oil output by 500000 bpd

Falih: Saudi Arabia to cut December oil output by 500000 bpd

Now Saudi Arabia wants to act to prevent a further slide in prices which fell below $70 a barrel on Friday, and is leading discussions on cutting oil output next year, the sources said.

Khalid al-Falih told reporters that Saudi Aramco's customer crude oil nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand.

Cailin Birch, analyst at the Economist Intelligence Unit, said a slowing oil demand is beginning to appear in China, the world's largest importer of crude oil.

Earlier this week, Iraq's Oil Minister Thamer Ghadhban said the country plans to increase its oil output and export capacity in 2019, with a focus on the southern oilfields, and is close to reaching a deal with global companies.

In his speech at the start of the meeting, Falih said the recent sharp drop in prices had "surprised us".

"Saudi Arabia has stepped in front of the oil market bears, proactively announcing they will reduce exports", said Stephen Innes, head of trading for Asia/Pacific at futures brokerage in Oanda in Singapore.

The OPEC+ Joint Technical Committee, which met for talks ahead of Sunday's meeting, has given a preliminary 104 percent compliance rate to its cuts deal in October, according to a delegate.

"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 before the meeting.

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

Suheil al-Mazrouei, energy minister of the host country UAE, hinted that producers are preparing to cut output.

A record influx of U.S. crude at 11.6 million bpd, outpacing Saudi Arabia's output of 10.7 million bpd and Russia's 11.4 million bpd, has sent prices tumbling down.

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.

He also attributed the sharp drop in prices to "microeconomic uncertainties", and signs of a build-up in crude inventories.

But producers eased output cuts in June after signs of a tighter market and higher prices, selling hundreds of thousands of extra barrels.