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Oil prices climb after Saudi Arabia announces production cut

12 November 2018

A record influx of USA crude at 11.6 million bpd, outpacing Saudi Arabia's output of 10.7 million bpd and Russia's 11.4 million bpd, has sent prices tumbling down. After dozens of media reports claimed that Iranian oil exports had been falling sharply and steadily, data now suggests the fall has been less steep-a fact immediately weighing on oil prices.

"Targeting 100 per cent [compliance] is no longer recommended for the ministerial conference", said Mr Al Mazrouei.

"Iran's armed forces. are prepared today as in the past to protect our fleet of oil tankers against any threats so that it can continue to use marine waterways", Rear-Admiral Mahmoud Mousavi, a deputy commander of Iran's Army, said Monday.

Falih had stated that OPEC may need to cut output because oil markets may see an oversupply again next year.

Khalid al-Falih's comments followed a meeting in Abu Dhabi at the weekend, where major producers started laying the groundwork to cut supply in 2019, reversing an nearly year-long expansion. Our October numbers have been reported by other secondary sources.

Saudi Energy will export 500,000 fewer barrels a day in December than this month, taking the lead in OPEC to counter the price rout battering the finances of group members and energy companies alike.

"With Iranian waivers coming in higher than anyone expected, Saudi Arabia is acting responsibly by reducing its production that it had earlier brought online to offset possible Iranian losses", said Amrita Sen, chief oil analyst at Energy Aspects Ltd, a consultant in London.

"We have to study all the factors", Falih said.

"Russia's contribution has helped us come out of a deep ditch".

The producers need prices that are high enough to balance their budgets and low enough to stimulate demand and shield themselves from attacks from American President Donald Trump. "We need to look at 2019 with the view to keeping the markets balanced".

Saudi Arabia has been pumping 10.7 million bpd since October, Falih said.

Al-Falih said that demand for Saudi crude was weaker for the first time since the kingdom started boosting production in the May-June period.

Meeting in Abu Dhabi to examine how to curb a sharp slide in oil prices, the producers said they "reviewed current oil supply and demand fundamentals and noted that 2019 prospects point to higher supply growth than global requirements".

"While the Saudis said it's too early to go ahead with discussions on production cuts, Russian Federation said supply exceeding demand is a seasonal factor, signaling it's not necessarily keen to cut output", Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp. said, predicting "many twists and turns" before OPEC's next meeting in December.

Oil prices climb after Saudi Arabia announces production cut