Saudi Arabia on Sunday announced that its country will cut its oil production, which in December will cause a drop in exports to 500,000 barrels per day in the context of a sharp decline in oil prices over the past month.
Saudi Minister Yalal al Faleh said at a ministerial meeting of oil producing countries in Abu Dhabi, which focused on a study on the possibility of cutting oil production.
Energy Ministers of Russia, Saudi Arabia, Kuwait, Venezuela and the United Arab Emirates are participating in the negotiations. Russia, the main producer and exporter of hydrocarbons, is the only country that is not a member of OPEC (Organization of Petroleum Exporting Countries).
In view of the rise in production of some major oil countries and the fear of falling demand, oil prices in the month lost about 20% when they reached the highest level in October. in four years.
"I have a message I am reporting," the Saudi minister said in a press release on Sunday. "Crude oil exports in the country will be 500,000 barrels down in December than in November," Faleh said.
He added, however, that there is still no consensus among major producer countries to reduce production by mutual agreement to maintain quotations.
"We have to study all the factors," Faleh explained.
The price of black gold is decreasing
Brent's barrel price dropped below half a million dollars on Friday for the first since April, and the New York barrel of the WTI under $ 60.
Despite signs of falling demand, Saudi Arabia, Russia, Kuwait and Iraq have recently increased their gross production and the United States has done the same thing with shale oil.
The recent decline in oil prices is the result of a decline in China's demand, the largest importer on a planet that slows growth, said Cailin Birch, an analyst at The Economist Intelligence Unit. In addition, US sanctions against Iran, which threaten to reduce world supply and raise prices, proved to be less serious than expected.
Agreement between Moscow and Rijaya
Russia and Saudi Arabia – two of the three largest producers in the world – changed their previous agreement in June to cut production and decided to raise additional raw materials and offset the decline in oil exports in Iran.
Since December 2016, OPEC countries led by Saudi Arabia and other non-cartel countries such as Russia have actually been negotiating a reduction in oil production.
At a meeting of the Joint Ministerial Committee on Sunday, following a deal, participants are studying the decline in their production to halt the recent fall in prices.
Riyadh increased its production from 9.9 million barrels per day (mbd) in May to 10.7mbd in October, according to Minister Faleh.
According to Fawad Razaqzad, an analyst at Forex.com, officials in Abu Dhabi are discussing "the need to return to respecting the deal [de limitar la producción] 100% "following Washington's decision to grant exemption to eight Iranian oil importers.
"Prices are declining as large producers such as Saudi Arabia, Russia and the United States are still rising, exceeding the amount of Iranian barrel losses," he adds.
If the producers "do not show their intention to invest in the latest output growth, oil prices may further decline," Commerzbank analysts warn.
Saudi Arabia's export declaration lasts weeks before the OPEC Plenary Meeting in Vienna in December.