OPEC and the non-OPEC partners in the deal are discussing potentially cutting oil production by as much as 1.4 million bpd to try to lift oil prices out of the current rout, Reuters reported on Wednesday, citing three sources familiar with the talks.
A proposal to reduce oil supply by 1.4 million was one of the options that the OPEC/non-OPEC joint committee discussed at their meeting in Abu Dhabi on Sunday, according to Reuters’s sources, who added that OPEC’s Iran and the leader of the non-OPEC group Russia have yet to be convinced to back such a proposal.
“I believe a cut of 1.4 million bpd is more reasonable than above it or below it,” one source told Reuters.
After the OPEC-Non-OPEC Joint Ministerial Monitoring Committee (JMMC) meeting on Sunday, OPEC said that the Joint Technical Committee (JTC) that reviews the state of the oil market is tasked to come up with “options on new 2019 production adjustments, which may require new strategies to balance the market.”
This was OPEC’s admission that an oversupply may be coming next year.
Khalid al-Falih, the Energy Minister of OPEC’s de facto leader Saudi Arabia, said on Monday that based on the OPEC+ group technical analysis, “there will need to be a reduction of supply from October levels approaching a million barrels.”
While al-Falih reiterated that “we need to do whatever it takes to balance the market,” Russia’s official position is ‘wait and see’ and not to rush into hasty decisions. After the Abu Dhabi meeting, Russian Energy Minister Alexander Novak said that the partners need to continue monitoring the market situation and that they discussed continuing their cooperation into 2019.
“We need to look at the situation very carefully to see how it will develop so that we don’t end up changing our course by 180 degrees every month,” Novak told CNBC on Sunday.
“We are not excluding cuts,” Novak told Bloomberg on Monday, but noted that he wouldn’t want to put an accent only on this measure.
Following the report that OPEC and allies have been discussing a 1.4-million-bpd cut, oil prices were tentatively rising early on Wednesday, after a 7-percent tumble to one-year lows on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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