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Saudi Arabia is discussing a proposal that could lead OPEC and non-OPEC oil producers to cut production by up to 1 million barrels a day, two producers said on Sunday. largest oil exporter in the world was facing a drop in the price of crude oil.
The sources said such an agreement would depend on factors such as the level of Iranian exports after the United States imposed sanctions on Tehran but granted major oil buyers in Iran derogations allowing them to continue buying oil.
Riyadh was surprised by the waivers granted to customers such as China and India, a decision that had a negative impact on oil prices, at least three industries and sources of OPEC have told Reuters.
Saudi Arabia now wants to take action to prevent a further drop in prices, which fell below $ 70 a barrel on Friday, and is leading discussions on reducing oil production next year, the sources said.
Under an agreement that was due to expire at the end of the year, OPEC producers and other countries agreed to cut their production by about 1.8 million. bpd.
But producers eventually reduced their activities – partly because of unexpected breakdowns in Venezuela, Libya and Angola – and agreed in June to limit reductions to the agreed level, which means restoration of about 1 million bpd.
OPEC and its allies will meet in Vienna on 6 and 7 December to decide on the production policy for 2019.
There is a general discussion about this (cut). But the question is how much will reduce the market, said one of the sources on the eve of a meeting of a monitoring committee in Abu Dhabi on Sunday, which would involve the biggest producers, Saudi Arabia and Russia.
"Nobody expects these derogations.Arabia wants to at least put a floor on oil prices.Nobody wants a free fall in prices," added the source.
Kazakh Deputy Energy Minister, Magzum Mirzagaliyev, told reporters in Abu Dhabi that he understood that Saudi Arabia suggested to use the production levels in the country. August to October as a baseline for determining reductions.
Brent lost Friday 47 cents, or 0.7%, to settle at 70.18 dollars a barrel. It lost about 3.6% during the week and lost more than 15% this quarter.
Washington has granted 180-day waivers to eight Iranian oil buyers: China, India, South Korea, Japan, Italy, Greece, Taiwan, and Turkey. Trade data show that this group absorbs up to three quarters of Iran's oil exports by sea.
The US administration has pledged to reduce Iran's oil exports to zero and US President Donald Trump has lobbied Saudi Arabia to increase production to cool the market.
Exports of Iranian crude could fall to just over one million bpd in November, about one-third of their peak in mid-2018. But traders and analysts believe that this figure could increase from December, with importers using their waivers.
Saudi Energy Minister Khalid al-Falih said last month that the kingdom will pump 11 million bpd in November, against 10.7 million bpd in October.
He also added that an intervention might be needed to reduce oil stocks after increases recorded in recent months.
US sanctions against Iran are aimed at curbing Tehran's nuclear and missile programs, as well as its support for alternative forces in Yemen, Syria, Lebanon and other parts of the Middle East.
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