Major producers to consider cuts after oil price slide

MAJOR oil producers met in Abu Dhabi yesterday to consider reverting to output cuts after a sharp slide in crude prices revived fears of a 2014-style crash. Oil prices shed a fifth of their value in just one month after surging to a four-year high in early October, driven by a combination of factors centered on higher supply and fears of sluggish demand. Brent crude dropped below $70 a barrel on Friday for the first time since April while the New York’s West Texas Intermediate (WTI) sank below $60 a barrel, a ninemonth low. The United States has upped production of shale oil, while Saudi Arabia, Russia and others have raised supplies of crude amid signs of slowing demand. The slide also comes during signs of a softer-than-expected impact from US sanctions on Iran oil exports.

“Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the US, more than compensating for lost Iranian barrels,” Forex.com analyst Fawad Razaqzada told Agence France-Presse (AFP).

Energy ministers of top producers Russia and Saudi Arabia joined other OPEC and non-OPEC officials for the meeting of the Joint Ministerial Monitoring Committee, which oversees production levels. The world’s second and third crude producers - after they were overtaken by the United States thanks to shale oil - Russia and Saudi Arabia are the core of an alliance of producer nations that succeeded in solidifying oil prices after the 2014 crash.

Through large production cuts starting at the beginning of 2017, they managed to push up oil prices from below $30 a barrel to over $85 a barrel in October, strongly improving their revenues. But the producer nations eased the output cuts in June after signs of a tight market and higher prices, allowing hundreds of thousands of extra barrels into the market.