OPEC needs output cut to balance market: Ecuador
RIYADH: OPEC member Ecuador’s oil minister said yesterday that the only way to balance the market was to cut production and that it aimed to reach an agreement on that at the group’s December meeting. “The only way to balance the market is to cut production,” Pedro Merizalde told Reuters on the sidelines of a summit of Latin American and Arab countries in Riyadh.
The oil price has slumped to around $47 per barrel from above $115 last June, putting huge pressure on the finances of many exporters.
Saudi Arabia, the cartel’s largest exporter, has resisted calls from other members to agree to a cut in production, but as low prices tighten the screws on government budgets, many expect more calls from smaller producers like Ecuador to cut output. Asked about the outcome of OPEC’s December meeting, Merizalde said: “Let’s see if we can have agreement...in order to balance (the market).”
He added that Ecuador would need allies at the meeting as any decision requires agreement of all members, but said a higher oil prices would benefit Saudi Arabia as well as other members. “What is more convenient, if you sell 10 million barrels at $40 per barrel, or if you produce 8 million barrels at $60?” Asked if he had yet met Saudi Arabia’s Oil Minister Ali AlNaimi at the summit, Merizalde said he had not, but it was possible that he could do. — Reuters