Saudi Arabia is reducing oil supply; OPEC may cut too

Gladys Abbott
November 14, 2018

The United States re-imposed sanctions against Iran's oil exports, which had been lifted under the landmark 2015 nuclear agreement to curtail Iran's nuclear program.

Dutch bank ING said that, given the abundance of global supply as well as the threat of an economic slowdown, "cuts over 2019 are unavoidable ... as it is becoming clearer that as we move closer towards 2019, the market will see a sizeable surplus at least over the first half of 2019".

"I'll tell you a piece of news which is (that) December nominations are 500,000 barrels less than November". We are living amidst effective decisions that the deal is to stay in place till the end of the year. Oil prices have shed about one fifth of their value over the past month on oversupplies and signs of a softer-than-expected impact from United States sanctions on Iranian crude exports.

The UAE's Mazrouei said the goal of Opec and non-Opec cooperation was to strike a balance in the market. "I would not want to focus purely on production cuts", Russian Energy Minister Alexander Novak told Bloomberg Monday.

Oil prices dropped again after the fourth-week loss.

"One thing that is abundantly clear, OPEC is in for a shale shocker as US crude production increased to a record 11.6 million barrels per day and will cross the 12 million threshold next year", said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore. "If that means trimming supplies by a million (bpd), we will". "There is not a lot of time left before the OPEC meeting in December, and the group may not be able to build consensus by then".

"There is a general discussion about this".

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The Joint OPEC-non-OPEC Ministerial Monitoring Committee reportedly debated over whether it would be necessary to reduce output by one million barrels a day next year to prevent a market glut.

Iraq now pumps around 4.6 million barrels per day (bpd) of oil, second only to Saudi Arabia in the Organization of the Petroleum Exporting Countries.

He also made it a point to mention that they were not in the business of predicting future oil prices.

Iraq and Saudi Arabia agreed on Saturday to work together to stabilize oil markets, Iraq's Oil Ministry spokesman Asim Jihad said, without giving further details, Reuters reported.

Emerging markets are already contending with US-China trade tensions, policy tightening in developed countries and a resurgent dollar.

Brent LCOc1 ended down $4.65, or 6.6 percent, to $65.47 a barrel, the largest one-day loss since July. As my colleague Matthew DiLallo noted back in September, a second Plains All American pipeline will start up in the third quarter of 2019, followed quickly by as many as four more new pipelines over the following 12 months. However, this month, Washington went ahead and granted waivers to 8 of Iran's customers, thereby confounding a market that had been anticipating a very strict enforcement of the sanctions.

U.S. crude oil stockpiles in the week ending November 2 increased by 5.8 million barrels, or about 3 percent above the five-year average for this time of year, according to the U.S. Energy Information Administration (EIA).

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