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New YorkFalling prices and signs of global oversupply shook the oil market. Uncertainty and fears of a new downward trend prevailed. According to the media, the largest oil producers are now considering reducing their subsidies to put an end to the price collapse that has been raging since early October.
Saudi Energy Minister Khalid al-Falih said Sunday that the energy giant, Saudi Aramco, would reduce its oil exports by about 500,000 barrels a day in December. He spoke at a meeting of the Organization of Petroleum Producing States (OPEC) and a number of non-OPEC countries in Abu Dhabi during the weekend.
Saudi Arabia, the world's largest oil exporter, has produced 10.7 million barrels a day since October. While Riyadh decided to cut exports, the rest of the participants, according to al-Falih, did not reach an agreement. However, participants in a statement warned after the meeting that the gap between supply and demand could widen next year, which might require "new balancing strategies. of the market".
Russia sent mixed signals to a possible reduction in production. Russian Oil Minister Alexander Novak announced on Sunday that his country was open to cuts when it was approved by a group of producers, including Opec.
However, Novak also said that it was "hard to say" if oil markets will be oversupplied next year. "We have to wait a moment to see how the market is developing," he added.
At the same time, Oman Oil Minister Mohammed Bin Hamad al Rumhy told the "Wall Street Journal" about the meeting: "There is a consensus that an offer surplus will come in 2019. "
This opinion is shared by market experts and badysts. "The meeting clearly shows that producing countries are concerned that prices will keep falling as supply and demand rise," said Jason Bordoff, professor at Columbia University and former head of the board. of the Obama administration's energy, at the AP news agency. ,
However, Bordoff added that oil countries may not yet be ready to cut production, uncertainty about the impact of new US sanctions on oil production in Iran.
Saudi Arabia, Russia and other oil producers gathered this weekend in the capital of the United Arab Emirates to determine if cuts might be needed for next year for about a year. million barrels a day. A decision is now expected at the OPEC conference in Vienna on December 6th.
The oil cartel and Russia had agreed to increase their production in June, fearing that US sanctions against Iran, a member of OPEC, would create bottlenecks. Saudi Arabia, Russia and the United States continued to increase their emissions to offset Iran's possible losses. Now, they produce more than necessary. The three countries produce more than 33 million barrels a day, a third of the world's supply.
In addition, eight countries are temporarily exempt from oil sanctions and can continue to supply in Iran: India, China, Turkey, South Korea, Italy, Greece, Japan and Taiwan.
Three days after the entry into force of US sanctions on November 5, the price of US oil slid into a bear market. Since the beginning of October, the price of US oil has fallen 21% to about $ 60 a barrel, its lowest level in eight months. A barrel of Brent crude from the North Sea cost a few weeks ago about $ 86 and now falls below the psychologically important limit of $ 70.
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