Falih: Saudi Arabia to cut December oil output by 500000 bpd

Saudi Arabia’s Energy Minister Khalid Al-Falih

"The technical analysis we reviewed yesterday 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 imposition of sanctions against Iran and those who do business with Iran has had a very limited impact on oil prices, due in large part to strong output from the US and Russian Federation.

"Many of us share this view", the minister said when asked about the need for a cut.

The world's second and third crude producers - after they were overtaken by the United States thanks to shale oil - Russian Federation and Saudi Arabia are the core of an alliance of producer nations that succeeded in solidifying oil prices after the 2014 crash.

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

USA energy firms last week added 12 oil rigs in the week to November 9 looking for new reserves, bringing the total count to 886, the highest level since March 2015, Baker Hughes energy services firm said on Friday. US West Texas Intermediate (WTI) crude futures rose 1.5 per cent to $61.08 per barrel.

Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak.

The exporters' group, which had reversed output restrictions in place last year to boost production to temper a three-year rally in oil prices to around $80 (Dh294) per barrel this year, is now looking to resort to a strategy to curb output.

Suheil al-Mazrouei, energy minister of the host country UAE, hinted that producers are preparing to cut output.

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Saudi Arabia pumps about 10.4 million barrels of oil each day, with production decisions set at the national level and in coordination with OPEC.

"There is no consensus yet among oil producers about cutting production", Falih said.

Global oil producers - including OPEC and Russian Federation - pump out roughly 100 million barrels of oil per day, so a 1% cut in production might not seem like a big deal. "Sanctions didn't cut so much out of the market as anticipated", he added.

Kazakh deputy energy minister Magzum Mirzagaliyev told reporters in Abu Dhabi that he understood Saudi Arabia was suggesting using August-October output levels as a baseline for determining cuts.

"We want to enter 2019 with a minimum amount of stocks", Falih said.

"Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the United States, more than compensating for lost Iranian barrels", Forex.com analyst Fawad Razaqzada told AFP before the meeting.

Crude oil dropped to a low of $30 a barrel in January 2016.

The outlook for oil, a key source of revenue for Russian Federation and Saudi Arabia, is adding a fresh twist for a market already obsessed with Federal Reserve tightening and the U.S.

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