Re­turn to oil pro­duc­tion curbs by OPEC, al­lies in 2019 can’t be ruled out

OPEC, non-OPEC panel meets on Sun­day to dis­cuss mar­ket as crude oil prices drop

Business World - - World Business -

LON­DON — A re­turn to oil pro­duc­tion cuts by the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries (OPEC) and its al­lies next year can­not be ruled out, two OPEC sources said on Wed­nes­day, to avert a pos­si­ble sup­ply glut that could weigh on prices.

The sources were re­spond­ing to a re­port by Rus­sia’s TASS news agency that Rus­sia and Saudi Ara­bia had started bi­lat­eral dis­cus­sions over pos­si­ble curbs to out­put in 2019.

Saudi-led OPEC and its al­lies in­clud­ing Rus­sia de­cided in June to re­lax out­put curbs in place since 2017, af­ter pres­sure from US Pres­i­dent Don­ald Trump to re­duce oil prices and make up for sup­ply losses from Iran.

Asked whether dis­cus­sions pointed to a re­turn to sup­ply cuts in 2019, one of the two sources, who are del­e­gates from the OPEC, said: “Cer­tainly not the other way around.”

Oil prices have come un­der down­ward pres­sure from ris­ing sup­plies, even though Ira­nian ex­ports are ex­pected to fall be­cause of new US sanc­tions. Fore­casts of a 2019 sup­ply sur­plus and slow­ing de­mand have also dented the mar­ket.

Brent crude LCOc1 had dropped from a four-year high in Oc­to­ber above $86 a bar­rel to $71 on Tues­day. Prices ral­lied back above $73 on Wed­nes­day, sup­ported by the TASS re­port.

Sep­a­rately, a top OPEC of­fi­cial from Iran, which has been an­gered by higher pro­duc­tion in Saudi Ara­bia and Rus­sia in re­sponse to Mr. Trump’s calls, said Riyadh and Moscow needed to cut out­put by one mil­lion bar­rels per day.

“There is no other way for Saudi Ara­bia and Rus­sia,” Hos­sein Kazem­pour Arde­bili, who rep­re­sents Iran on OPEC’s board of gov­er­nors, told Reuters when asked whether pro­duc­ers needed to trim out­put in 2019.

The ex­tra sup­ply has caused a drop in crude prices, hurt­ing in­come for other oil pro­duc­ers while help­ing Iran’s foe Mr. Trump in the US midterm elec­tions, Mr. Kazem­pour said.

“They pushed the prices $15 a bar­rel lower in one month and only made US gaso­line cheaper for Trump. They lost bil­lions on rev­enue and caused losses to poor pro­duc­ers in Africa and South Amer­ica,” he said.

A min­is­te­rial com­mit­tee of some OPEC mem­bers and al­lies meets on Sun­day in Abu Dhabi to dis­cuss the mar­ket and out­look for 2019. Iran is not a mem­ber of this com­mit­tee, which it wants scrapped.

This group, called the JMMC, could make a rec­om­men­da­tion on 2019 out­put pol­icy to the next de­ci­sion-mak­ing meet­ing of OPEC and non-OPEC oil min­is­ters, a third OPEC source said. That meet­ing takes place on Dec. 6-7 in Vi­enna.

“Any se­ri­ous dis­cus­sion will be to­wards the De­cem­ber meet­ing,” this source said. —

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.