OPEC: Oil production cuts likely necessary
ABU DHABI, UNITED ARAB EMIRATES — OPEC and allied oil-producing countries will likely need to cut crude supplies, perhaps by as much as 1 million barrels of oil a day, to rebalance the market after U.S. sanctions on Iran failed to cut Tehran’s output, Saudi Arabia’s energy minister said Monday.
The comments from the minister, Khalid al-Falih, show the balancing act the U.S. allies face in dealing with President Donald Trump’s actions related to the oil industry.
Trump in recent weeks demanded the oil cartel increase production to drive down U.S. gasoline prices. “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” he tweeted Monday.
The U.S. has allowed some allies — Greece, India, Italy, Japan, South Korea, Taiwan and Turkey — as well as rival China to continue to buy Iranian oil despite re-imposed sanctions, as long as they work to reduce imports to zero. Khalid al-Falih says OPEC has seen analysis suggesting a production cut is needed to rebalance the market.
Al-Falih, who on Sunday said the kingdom would cut production by over 500,000 barrels per day in December, said Monday that Saudi Arabia had been giving customers “100 percent of what they asked for.” That appeared to be a veiled reference to Trump.
Before the United States re-imposed sanctions on Iran, “fear and anxiety gripped the market,” al-Falih said at the Abu Dhabi International Petroleum Exhibition & Conference. Now “we’re seeing the pendulum swing violently to the other side.”.
The energy minister of the United Arab Emirates, Suhail al-Mazrouei, currently the president of OPEC, said “changes” likely would be necessary as the oil cartel meets in December in Vienna.
But “we need not to overreact when these things happen,” he said.