Saudi Arabia doesn’t need USA permission to cut oil output - energy minister

Oil prices skid amid global stock market slump, swelling US supply
Trump asks OPEC not to cut production
Author

07 December, 2018

"Countries participating in the agreement will have to cut their combined output by at least 1 million bpd from the October 2018 level in order to have a meaningful bullish effect on oil prices".

OPEC members agreed to cut oil output on Thursday, although it's unclear by how much.

OPEC members are all mentioning that production cuts will be at 1 million bpd and the market isn't liking it. Price has now dipped by more than 3% on the day to $51.15 and is looking to head towards threatening the $50 handle in due time.

"I think a million [barrels a day] will be adequate personally", Saudi Oil Minister Khalid Al-Falih said upon arriving to the meeting in Vienna.

Russia's oil giant Lukoil said it's ready to cut production if the upcoming meeting results in a deal to prop up prices, the company's CEO Vagit Alekperov told reporters, according to TASS news agency.

The US "is not in a position to tell us what to do", the oil minister added, a day after US President Donald Trump urged the cartel to keep the taps open so as to push prices down.

In a sign of easing tensions between the world's two biggest economies, Chinese oil trader Unipec plans to resume United States crude shipments to China by March after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, people with knowledge of the matter said. It is expected to show a 1.3 million barrel decline.

The measure is aimed at controlling global oil prices that have seen a dramatic crash of more than 30 percent over the last two months, placing the budgets of oil-exporting nations under considerable pressure.

Oil prices skid amid global stock market slump, swelling US supply
OPEC members expected to agree oil production cut

A day of preliminary talks in the Austrian capital on Wednesday concluded with a panel led by Saudi Arabia and Russian Federation recommending an output reduction lasting six months, but the committee didn't discuss how big any cuts should be.

Some experts saw that as a tactical move by OPEC countries to not announce a production level as they prepare to ask Russian Federation and several other smaller non-OPEC countries to also cut their output.

"While the large crude oil inventory drop was notable, the surge in exports of crude oil to over 3 million barrels per day was remarkable", said John Kilduff, partner at energy hedge fund Again Capital LLC in NY.

Otherwise, he added, the U.S. official has adopted an unprofessional, naïve, and meddlesome approach.

Iran, OPEC's third-biggest producer, complained that it was the first time a United States president was trying to tell OPEC what to do.

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day. While Saudi Arabia, the group's biggest producer, will shoulder most of the burden, the kingdom wants commitments from other countries before completing a final deal.

"They should know that OPEC is not part of their Secretary of Energy", said its minister Bijan Namdar Zanganeh.

"The number that we need is going to be less than 1.3 [million]".

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