Saudi Arabia’s energy minister on Thursday said an OPEC/non-OPEC oil production cut of 1 million b/d “would be adequate,” though the coalition is considering proposals ranging from 500,000 to 1.5 million b/d.
But OPEC is not certain to reach a deal, Khalid al-Falih cautioned, saying it was “still an if” that the producer bloc would cut output. “We want to come up with something that will balance the market but we don’t want to shock the market,” Falih told reporters just before OPEC’s closely watched meeting in Vienna. Ten non-OPEC producers led by Russia will join the talks Friday, and Falih said that Russia had already agreed to participate in cuts.
Still, he said, “I don’t think it’s fair to say that by Russia agreeing, everything falls into place.” He added that he would like any agreed cuts to be equally shared between members and run at least into the third quarter of 2019. His “strong preference” was for no exemptions from the cuts to be granted. Libya and Nigeria were exempted from the current round of cuts that are set to expire at the end of the year, while Iran was given a cap near its maximum production capacity.
“The fair and equitable solution is that everybody cuts the same amount,” said Falih, who is OPEC’s de facto leader as representative of its biggest producer. As a gesture of good faith, Saudi Arabia would accept its October production level as the baseline for any cuts, since November production surged due to customer demand, he said. The kingdom produced 10.63 million b/d in October, according to OPEC.
Saudi Aramco has lowered its allocations for December loadings by “over 500,000 b/d less than November,” the minister said, with exports likely to come in around 7.7 million b/d. January export levels “will depend on what we agree to today.” As for Qatar’s surprise announcement Monday that it was leaving OPEC effective January, Falih said he was hopeful that other countries would take its place.
“We are talking to many countries,” he said. Alberta’s decision to implement a production cut due to pipeline constraints that have crashed local oil prices there showed that “without stewardship over this market, all producers suffer,” Falih said. Platts.com
