Saudis call for cuts to counteract low prices

SAUDI Arabia’s energy minister has urged a global output cut of 1 million barrels per day to re-balance the market, as Riyadh unveiled plans to cut production by 500,000 bpd from December.

“The technical analysis we reviewed shows that we need a reduction approaching 1 million bpd to balance the market,” Khalid al-Falih told an energy conference in Abu Dhabi. The proposed reduction is from October production levels.

Russia, another major producer, struck a more measured tone however.

“I think we would have to wait and see how the market is unfolding because our ultimate goal is market stability,” Russian Energy Minister Alexander Novak said.

Oil prices have shed a fifth of their value over the past month due to oversupply and signs of a softer-than-expected impact from sanctions on Iranian crude exports.

The 15 members of the Organization of Petroleum Exporting Countries alone pump over a third of global crude supply.

Any official decision on global output cuts will be made at a key ministerial meeting for OPEC and nonOPEC producers in Vienna in early December, Falih said.

The UAE’s energy minister, Suhail al-Mazrouei, said balancing the market would “require changes in the strategy” of producers.

Brent crude dropped below US$70 a barrel on Friday for the first time since April but it was trading above US$71 a barrel yesterday.

West Texas Intermediate crude also dropped to a ninemonth low, below US$60 a barrel.

It was trading above US$61 yesterday.