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ABU DHABI – Oil prices skyrocketed on Monday morning after weeks of losses that had wiped out all of the crude gains for 2018, as OPEC and its allies signaled their willingness to cut production again despite the growth in global supply.
Brent, the global benchmark for oil, rose 1.3% to $ 71.08 a barrel at the London Intercontinental Exchange. West Texas Intermediate standardized futures are trading up 0.7% to $ 60.60 per barrel.
"We must do all that is necessary to balance the oil market," Saudi Energy Minister Khalid al-Falih said Monday at the international gathering of oil ministers and oil executives. ;industry.
Mr. Falih, de facto president of the Organization of the Petroleum Exporting Countries, said that if current levels of supply and demand do not change, the oil cartel and its producing partners, led by Russia, should reduce their production of about 1 million barrels a day at the group level.
These comments come less than a day after Saudi Arabia, the largest OPEC member and the world's largest exporter of crude oil, Russia and other producers gathered in the capital of the United Arab Emirates to discuss a possible reduction of their production.
Oil prices rebounded after OPEC announced an agreement to cut production.
Photo:
France / Press France / Getty Images
Although the group did not make a final decision on production levels on Sunday, he acknowledged the need to change strategy just months after the decision to increase production. This decision comes after OPEC and 10 non-cartel producers curbed their production for more than a year to limit the glut of global supply that weighed on prices since late 2014. .
"There is a consensus that there will be an oversupply in 2019," Omani Oil Minister Mohammed bin Hamad al-Rumhy told the Wall Street Journal at the end of his speech. Sunday meeting. He added that the producer coalition would probably agree to reduce supplies at their rally next month in Vienna.
"The magnitude of any reduction in production will likely depend on the slowdown in oil demand growth in 2019, the reduction in the Iranian supply due to sanctions imposed by the United States and the strong increase in the US supply in the coming months, "said Giovanni Staunovo, commodity analyst. at UBS Wealth Management.
Saudi Arabia, Falih, also said on Sunday that his country would unilaterally reduce its exports next month by about 500,000 barrels a day, compared with the November level. However, Russia – currently the largest oil producer in the world – has sent mixed messages about the possibility of reducing supply.
Both raw benchmarks fell by about 20% since their highest peak in four years at the beginning of last month, due to signs of weakening global demand for oil and gas. an increase in the supply of producers like the United States.
Oil prices continue to fall after the US unexpectedly announced last week that it would allow eight buyers of Iranian crude to continue their imports. In May, President Trump released the United States from a 2015 international agreement aimed at curbing the Iranian nuclear program, paving the way for the re-imposition of sanctions on November 5 targeting the oil industry of the Islamic Republic.
This decision prompted many Iranian customers to significantly reduce their imports before maturity, tightening global supply and raising prices before the recent collapse.
But Ehsan Khoman, head of research for the Middle East at MUFG Bank, is "convinced that Brent and WTI will recover from their current bear market mode". He expects OPEC and its partners to comply with a new production reduction agreement next month, with the question of the speed and scope of reductions, as well as quota allocation of each Member State. "
Write to Christopher Alessi at [email protected]
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