OPEC and allies ‘weigh’ further oil production cut in December
US briefly overtakes Saudi as top oil exporter – IEA
ABU DHABI, Sept 12, (AP): OPEC and its noncartel allies on Thursday discussed further cuts to oil production and the possibility of Iran re-entering the global market but said that any decision would have to wait for a meeting in December.
Global oil prices fell on the news as forecasts predict a coming economic slowdown and a renewed supply glut.
Officials at the Organization of the Petroleum Exporting Countries committee meeting held in Abu Dhabi, including new Saudi Energy Minister Prince Abdulaziz bin Salman, sought to stress the group remained committed to stabilizing the market through a package of cuts that began in 2017.
However, Iraq and Nigeria openly acknowledged going beyond their allotments while promising further cuts. Estimates similarly show Russia, another heavyweight outside of OPEC, going beyond its allotments.
Meanwhile, Saudi Arabia continues its “extra-voluntary reductions,” Prince Abdulaziz said. A statement by the committee said that there was 136% compliance with the accord last month.
The prince said there would be “no half-cooked transparency” under his watch, while going out of his way to repeatedly praise those involved in the deal.
“It was productive, it was fruitful, it was transparent and more importantly every participant did see that there is a role to play and a way to improve this endeavor,” Prince Abdulaziz told journalists after the meeting.
Benchmark Brent crude traded at $60 a barrel after the meeting ended. Before the meeting started, it was trading above $61.
Crude oil sold for over $100 a barrel in the summer of 2014 before bottoming out below $30 a barrel in January 2016. That fall largely came from a boom in US shale oil and countries like Saudi Arabia keeping their production high to hold onto market share.
Hoping to boost prices, OPEC partnered with non-OPEC nations like Russia to lower their production beginning in 2017, the first such cut for the cartel in a decade. It reduced production by 1.2 million barrels per day, with 800,000 coming from OPEC and 400,000 coming from non-OPEC members.
That deal helped push prices back up, becoming what Prince Abdulaziz earlier this week described as an arrangement “’til death do us part.”
But the accord does not include America, which was the world’s top oil producer in 2018, according to the US Energy Information Administration. President Donald Trump has been pushing both OPEC and ally Saudi Arabia in tweets to keep prices low as well, mindful of how gasoline prices can swing elections in America. The average price for a gallon of regular gasoline in the US is $2.56, down from $2.83 a year ago, according to AAA.
The Paris-based International Energy Agency said in a report Thursday released during the meeting that the US momentarily even overtook Saudi Arabia in June as the world’s No. 1 gross oil exporter.
It’s “a reminder to the producers that competition for market share is getting tougher,” the IEA said.
It added that growth continued to weaken amid “uncertainty around the global economy, and particularly trade.” That’s a nod toward the trade war between China and the US, which has seen billions of dollars in tariffs levied between them.
“The challenge of market management remains a daunting one well into 2020,” the agency said.
That was a sentiment echoed by analysts.
LONDON, Sept 12, (RTRS): Global oil demand is weathering economic headwinds, the International Energy Agency (IEA) said on Thursday, buoyed by lower prices brought on by abundant supply as the United States briefly dethroned Saudi Arabia as the world’s top exporter.
“With oil prices currently about 20% lower than a year ago, there will be support for consumers,” the IEA said in its monthly report.
“Booming shale production has allowed the US to close in on, and briefly overtake, Saudi Arabia as the world’s top oil exporter ... in June, after crude exports surged above 3 million barrels per day (bpd).”
The Paris-based agency maintained its estimate for growth in global oil demand during 2019 at 1.1 million bpd and 1.3 million bpd for next year, assuming no further breakdown in US-China trade talks and citing an easing of tensions around Iran.
A rebound in US production following Hurricane Dorian along with steep output growth from Brazil and the North Sea were set to drive production from outside the Organization of the Petroleum Exporting Countries (OPEC) up sharply, it added.
US crude exports spiked to more than 3 million bpd in June, as Saudi Arabia cut output sharply and Russia grappled with contamination in one of its main export pipelines.
Non-OPEC production growth is seen rising to 2.3 million bpd in 2020, up 400,000 from this year. Meanwhile, demand for OPEC crude is set to reach 28.3 million bpd in the first half of 2020, 1.4 million bpd less than the group produced in August.
The discrepancy may prompt OPEC and its allies including Russia to revisit their production-curbing pact.
“The implied market balance (will be) returning to a significant surplus and placing pressure on prices,” the IEA said. “The challenge of market management remains a daunting one well into 2020.”
Russia, Iraq and Nigeria in August produced 600,000 bpd more than their quotas in the supply pact, the IEA said, but Saudi Arabia cut by more than it had pledged, keeping the overall agreement intact.
OPEC member Iran continued to suffer under US sanctions, with exports nearly halving month-onmonth in August to just 200,000 bpd. A year earlier, they were at 2.1 million bpd.