Oil climbs on report Saudi Arabia considering more export cuts

London, UK - Oil climbed to the highest level in two weeks following a report that Saudi Arabia is considering deeper export curbs.

Futures gained as much as two per cent in New York. Consultant Petroleum Policy Intelligence said the kingdom is considering additional export curbs of as much as 1mn barrels a day following signs that OPEC’s cutbacks aren’t clearing a global glut. Supplies from OPEC members Libya and Nigeria have recovered, while Iraq’s compliance has faltered and Ecuador announced it can no longer restrain output while its economy suffers.

Libya, exempt from a deal between the Organization of Petroleum Exporting Countries and its allies to shrink a glut, is boosting production as prices in New York languish below US$50 a barrel on concern ample global supplies will offset OPEC’s curbs. While no final decision has been made, Saudi Arabia is considering a unilateral reduction of its exports to counter the rise in Libyan and Nigerian output, according to UK-based consultants PPI.

“We think they are looking at options to speed up the rebalancing,” Bill Farren-Price, founder of PPI, said by phone. PPI’s report cited ‘key players in and outside for OPEC’ for its assessment of Saudi Arabia’s thinking.

West Texas Intermediate (WTI) for August delivery was at US$46.55 a barrel on the New York Mercantile Exchange, up 53 cents, at 9.57am. Total volume traded was about 20 per cent above the 100 day average. Prices dropped 52 cents to US$46.02 a barrel on Monday.

Brent for September settlement added 60 cents to US$49.02 a barrel on the London-based ICE Futures Europe exchange. The contract on Monday fell one per cent to US$48.42. Prices climbed 4.7 per cent last week. The global benchmark crude traded at a premium of US$2.24 to WTI.

Libya will participate in a technical meeting with fellow OPEC members as well as Russia in St Petersburg on Saturady to share the ‘factors enabling and constraining Libya’s production recovery’, Mustafa Sanalla, chairman of the National Oil Corp, said on Tuesday. Supplies from Libya have increased to 1.1mn barrels a day, according to a person familiar with the matter.

OPEC member Kuwait last week said Libya and Nigeria, another country exempt from cuts, may be asked to cap their oil output amid concern about their rebounding production.