Saudi minister calls for oil output cut

ABU DHABI: Saudi Arabia’s energy minister called yesterday for a global output cut of one million barrels per day to rebalance the market, as Riyadh unveiled plans to cut production by 500,000 bpd from December.

“The technical analysis we reviewed on Sunday shows that we need a reduction approaching one million bpd to balance the market,” Khalid al-Falih told an energy conference in Abu Dhabi.

“The proposed reduction is from October production levels,’’ he 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 US sanctions on Iranian crude exports. But they climbed yesterday as the world’s biggest supplier Saudi Arabia announced plans to cut production in response to fears of oversupply.

Falih said Saudi Arabia, the world’s largest oil supplier, would cut its production by 500,000 bpd as of next month to help stabilise the market.

The 14 members of the Organisation of Petroleum Exporting Countries, which include Saudi Arabia, 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 non-Opec producers in Vienna in early December,’’ Falih said.

“Oil producers will continue to evaluate the market data prior to the Vienna summit, but if we need to trim production by one million bpd, we will do,” he added.

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

“We need not overreact to falling prices,’’ he said, adding that crude was a dynamic market.

Iraqi energy minister spokesman Assem Jihad told AFP his country, also an Opec member, was hoping for “any decision that would help balance and stabilise the market”.

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

West Texas Intermediate crude also dropped to a nine-month low, below $60 a barrel. It was trading above $61 yesterday.

Falih’s comments followed a meeting in Abu Dhabi at the weekend, where major producers started laying the groundwork to cut supply in 2019, reversing an almost year-long expansion.

The group, including Russia and Saudi Arabia, warned that crude supply would outstrip demand next year.