Monday , September 26 2022

Russia and Saudi Arabia have experienced a decline in oil production


Saudi Arabia has opened the door to oil production cuts, despite Russia saying that any excess deliveries are in the short term, putting two of the world's largest producers in contradiction with oil policy.

Khalid al-Falih, the king's energy minister, said Sunday that Saudi Aramco, state energy giant, will deliver 500,000 barrels a day less in December than in November due to weak demand.

"Nominations in December are 500,000 barrels less than in November, so we see a smaller portion of it is the end of the year. Falih in Abu Dhabi before a meeting of Opec and countries outside the cartel that monitors oil production.

Saudi Arabia has increased crude oil production by 1m b / d after pressure from US President Donald Trump, who has asked Opec to help compensate Iran for losing its exports after reimposing US sanctions against its oil sector.

But even if the US called for support and the king promised to increase production, it granted derogations to large Iranian oil customers such as India and China, creating concerns over an overexploited oil market.

This caused a drop in Brent international oil prices below $ 70 / barrel on Friday, from over $ 85 / barrel in October.

Saudi Arabia has been worried about the existence of an excess supply on the market that signals a slowdown in world economy and oil demand.

Oil analysts, as well as Iranian officials, said a reduction of at least 1 millimeter a day would be needed to bring the market in balance.

The world's largest oil exporter is struggling with a further drop in oil prices that could have an impact on the ambitious social and economic reform agenda.

But Russia, the king's partner in striving to balance the market, said on Sunday it was not clear whether the market would survive next year with any imbalance caused only by seasonal factors.

People who know Moscow's production policy have told the Financial Times last week that the oil companies of the country were aiming to boost production by 300,000 b / d.

Saudi Arabia and Russia have collaborated on oil policy since 2016, when joint efforts to reduce production have led to the end of the oil crisis. In June this year, countries agreed to relax the oil curves to ease the rise in oil prices.

The official press release of producers who met on Sunday to monitor the fundamentals of the market said that 2019 "[pointed] to a larger supply than global requirements. "

Representatives of oil-exporting nations, who gathered before a ministerial meeting in December, noted that "dampening global growth prospects" could affect global oil demand next year.

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