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ABU DHABI – OPEC will likely accept a cut in oil production at its meeting in Vienna next month, the oil minister of Oman announced on Sunday after Saudi Arabia announced that she was going to reduce her own oil supplies and that Russia would follow suit.
"There is a consensus that there will be a supply surplus in 2019," Oman Oil Minister Mohammed bin Hamad al-Rumhy told The Wall Street Journal. at the end of the meeting of the Joint Ministerial Follow-up Committee in Abu Dhabi. Although Oman is not a member of OPEC, it is part of its production decisions.
The news came after Khalid al-Falih, the Saudi oil minister, said the kingdom was ready to cut production, while Russia left the door open for the possibility.
Saudi Arabia, Russia – the world's largest oil exporter – and a few other producers have been meeting in Abu Dhabi to discuss the possibility of reducing by 1 million barrels a day next year.
Speaking before the meeting, al-Falih said the reduction in Saudi output was imminent.
"December's nominations are 500,000 fewer barrels a day than in November. You will see a gradual decrease, "he said.
Russia, OPEC's main outside ally, was to oppose any further cuts as its state-run oil companies have invested heavily in speeding up production.
But Oil Minister Alexander Novak has not ruled out a cup next month. Speaking before the meeting, Mr Novak said that he was "in theory" open to gross production cuts, if the coalition reached a consensus and would adhere to any decision it will make.
The coalition of 25 producers members of the Organization of Petroleum Exporting Countries and outside the group is expected to make a decision next month in Vienna.
But Mr Falih said it was too early to say what would be decided at the meeting. "We will not be afraid of a cut, but only if it is necessary," he said, adding that the group had to make sure that "the excess supply will continue until 2019. "
He added that this collective decision remained very uncertain. "Quite frankly, we are seeing signs of [a persistent glut] leaving the United States [but] we did not see the signs overall, "he said.
Any reduction in production comes as oil entered a bear market on Thursday. Friday's closing marked the 10 consecutive losing strokes, the longest since July 1984.
The return of US sanctions against Iran and Washington's decision to grant temporary waivers to eight countries allowing them to buy oil from the Islamic Republic complicate OPEC's decision-making process.
In addition, Venezuelan Petroleum Minister Manuel Quevedo announced Sunday that his country planned to increase production by half a million barrels a day as part of an increase in its capacity powered by Chinese funds.
Helima Croft, RBC's main commodities strategist, said it was unlikely that Venezuela would increase its production even with an emergency cash injection. Many oil personnel leave their positions or "are hungry. The infrastructure is in bad shape, "she said.
The Wall Street Journal announced last week that a Saudi-funded think tank, the King Abdullah Petroleum Research and Studies Center, had studied a scenario in which OPEC would be dissolved. "Think tanks like to think. We will not discourage them from thinking, "said Falih of Saudi Arabia. "We ask them to consider all scenarios."
But the minister, who said he was speaking on behalf of Saudi leaders, said: "We believe that any professional study conducted by [KAPSARC] will show that the combination of cooperation and the reduction of extreme volatility will be the best for the market.
Write to Summer Said at [email protected], Christopher Alessi at [email protected] and Benoit Faucon at [email protected]
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