Saudi Minister Calls for 1 Mn Bpd Global Oil Output Cut

Saudi Arabia’s Energy Minister Khalid Al-Falih

Saudi Arabia’s Energy Minister Khalid Al-Falih

The sentiment of the market and of the producers in Algeria was totally different from today.

Major emerging economies like India, Indonesia and Turkey came under strong pressure ealier this year as their currencies slumped against the dollar just as oil prices surged, eroding demand.

The committee that oversees the 2016 OPEC+ agreement to manage supply met Sunday in Abu Dhabi. USA crude has lost 28 percent since its early October peak.

U.S. oil prices declined 10 straight days through Friday. Contango is a sign that the market is oversupplied at the moment.

Saudi Arabia's top government-funded think-tank has been studying the possible effects on oil markets of a breakup of OPEC, the Wall Street Journal reported on Thursday, citing people familiar with the matter.

He explained: "I think it's meant to be a long-term relationship and it started off about oil prices but you see it taking on other dimensions, for instance, Saudi investment in Russian LNG (liquefied natural gas) and Russian investment in Saudi Arabia".

A majority of OPEC and allied oil exporters support a cut in the global supply of crude, Oman Oil Minister Mohammed bin Hamad al-Rumhi said earlier in the Emirati capital. US oil production is primed to keep skyrocketing - and the higher oil prices go in the short term, the bigger the jump in USA output will be. Saudi Arabia has expressed concerns that USA sanctions have removed less oil from the market than expected.

Back in the energy sector, "a Saudi. output cut for December has helped boost ailing oil prices", Mahony said. The pass-through of a rising oil price to domestic consumer prices tends to be fairly quick and direct.

Russian Federation has been increasing oil production since March, active steps in this direction have been taken since June.

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In his speech at the start of the meeting, Falih said the recent sharp drop in prices had "surprised us". A reasonable price for OPEC to balance their fiscal budgets next year will be $60 to $80. Although JMMC does not have any formal decision-making power, it provides indications on the group's perspective and intentions.

The largest producer in the Organization of Petroleum Exporting Countries is once again taking the lead to address huge shifts in the market.

That "reflects the general risk associated with oil prices, and the stability of the market going forward". That said, the next question is what will happen to prices?

Saudi Arabia has earlier chose to request the United States to end its aerial refuelling for the Saudi operations, and US Secretary of Defence James Mattis responded that the Pentagon backs this decision.

OPEC oil supply looks roughly flat in aggregate in 2018 and 2019.

Saudi Arabia has its own reasons for defending prices.

"I think this is a strategic relationship because it's useful to both countries".

As the global oil industry recovers from one of the worst slumps in its history, the biggest worldwide energy companies are keeping their checkbooks closed and tightening up on investment so as to boost returns to shareholders.

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