ABU DHABI (Reuters) – The top oil producers on Sunday demanded new "production strategies" based on production adjustments to handle market balances between high supply and low demand.
At the end of a meeting in Abu Dhabi by the member countries of the Organization for Oil Producing Countries (OPEC) and other oil countries outside the cartel, a joint statement was issued at a time when the decline in the price of black gold gives rise to a fear of falling prices similar to what happened under 2014.
"The king will reduce its exports in December by 500,000 barrels compared with November," said Saudi energy minister Khalid al-Falih to journalists before the meeting.
Producer countries said in their statement that the production increase by 2019 would be greater than world demand. They would consider "options to adjust production that may require new strategies to achieve market balance".
Russia has said that it will follow a new agreement to restrict production.
In turn, UAE Energy Minister Suhail Al Mazrouei said that the goal of producing countries is to find an appropriate market balance.
"There is a need for a new strategy … whether it's reducing production or something else, but it will not be an increase in production," he said.
However, no joint decision was taken at the end of the meeting. Several ministers said that the recommendations should be made before the OPEC plenary session on 5 December in Vienna.
– "There is no agreement" –
Oil prices fell about 20% in a month after reaching a four-year high in early October.
Prior to the Abu Dhabi meeting, Al-Falih began to emphasize that there is no "consensus" between major manufacturing countries to reduce raw production by mutual agreement.
He pointed out that the Kingdom has produced since October 10.7 million barrels of oil per day, some 3 million of which are used internally and the rest.
His Russian counterpart Alexander Novak said for his part that Moscow has undertaken to implement the agreements reached in December 2016 in Vienna and in June 2018.
"If decisions are made in terms of market movement, Russia will of course work in coordination with other countries, so that the market is balanced and stable."
The price of a barrel Brent commodity on Friday to less than seventy dollars for the first time since April, while the price of a barrel of light oil to less than sixty dollars, marking a decline for the ninth month in a row.
Despite signs of slower demand, Saudi Arabia, Russia, Kuwait and Iraq have increased production of crude oil, like the United States, with its oil production.
The latest decline in oil prices is mainly due to lower demand in China, the world's largest importer of black gold, due to slower growth, says analyst at the Economist Intelligence Unit, Kyleen Birch.
– Iran's sanctions –
On the other hand, US sanctions against Iran, which threatened to reduce global supply and increase prices, showed less serious than expected.
In anticipation of US sanctions, Russia and Saudi Arabia, two of the world's three largest oil producers, have changed the agreement to restrict production so that they can extract more and compensate for cuts in Iranian oil exports.
Since December 2016, the organization of the petroleum exporting countries, the largest in Saudi Arabia and other oil producers outside the cartel, has concluded a contract to reduce production.
Riyadh increased production from 9.9 million barrels of oil per day in May to 10.7 million barrels in October, said the Saudi energy minister.
"There is a need to return to 100 percent respect for the deal," said Fouad Razakzadeh, an analyst at Forex.com after Washington decided to free eight Iranian oil importers from the consequences of sanctions.
"Prices are falling, while production of top producers such as Saudi Arabia, Russia and the United States continues to rise, exceeds the amount of Iranian barrels" lost by the market.
Analysts at Commerzbank warned that if "producers fail to show their intention to reverse the latest production increase, oil prices could fall further."
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