Saudi Arabia will ship less oil in December because of its floating

ABU DHABI (Reuters) – Saudi Arabia is planning to cut its supply of oil by 0.5 million barrels a day in December, its energy minister said Sunday, while OPEC has uncertain prospects to try to convince other producers to agree cut exit.

Khalid al-Falih told reporters that crude oil appointments from Saudi Aramco's customers would be reduced by 500,000 b / d in December compared with November due to lower seasonal demand. The reduction represents a reduction in global oil supply of about 0.5%.

Saudi Arabia has increased production by about 1 million bpd this year, under pressure from US President Donald Trump and other consumer countries, to help balance the market to offset the drop in Iranian supplies due sanctions imposed by the United States.

But as Iranian customers received generous exemptions to continue buying crude oil, worries about oversupply in the market increased and oil prices fell below $ 70 a barrel on Friday, as against 85 dollars a barrel in October.

"We have increased production in response to demand," Falih told reporters in Abu Dhabi before the joint meeting of the market surveillance committee of OPEC countries and non-member countries. ; OPEC.

"I'm going to tell you a news that the December nominations are 500,000 barrels less than November, so we're witnessing a gradual decline in production at the end of the year, maintenance … and we so ship less in December than in November. "

Saudi Arabia is discussing a proposal that could lead OPEC and non-OPEC oil producers to cut their production by a million barrels a day, two sources told Reuters on Sunday, while the first The world's oil exporter is tackling the drop in crude prices.

According to these sources, any such agreement would depend on factors such as the level of Iranian exports after the imposition of sanctions by the United States in Tehran, but a waiver granted to major Iranian oil buyers to continue buying oil.

Russia's participation has been crucial in helping OPEC rebalance the market in 2017-2018. But Russian Energy Minister Alexander Novak said Sunday he was not sure the market would be oversupplied next year.

He said the excess supply for the coming months would be seasonal, while the market could be balanced again by mid-2019 and that demand could even outstrip supply.

IRAN RENOUNDS TO SURPRISE

Riyadh was surprised by Washington's waivers to Iran's major customers, such as China and India, which affected oil prices, at least three industries, and OPEC sources. told Reuters.

Saudi Arabia now wants to act to prevent further price declines and is leading talks 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 cut back on their expenses and so agreed in June to limit their cuts in ways more than their production targets, which meant restoring about 1 million bpd of production.

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 (cutting). But the question is how much to reduce the market, "said one of the sources in Abu Dhabi Sunday.

"Nobody expected derogations. Saudi 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.

Falih did not rule out the possibility of a reduction next year, but also said that he would like to "move on to 2019 with a minimum of interventions".

"I think that ideally we do not like to cut. Ideally, we want the market to remain generously stocked and comfortable. We will cut only if we see a persistent overabundance emerge and, quite frankly, we see signs of this exit from the United States. We have not seen the signs globally, "he told reporters.

Brent crude LCoC1 Friday fell 47 cents, or 0.7%, to $ 70.18 a barrel. It lost about 3.6% during the week and lost more than 15% this quarter. [O/R]

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 three-quarters of Iran's oil exports by sea.

The US administration has pledged to reduce Iran's oil exports to zero and Trump has lobbied Saudi Arabia to increase production to cool the market.

Exports of Iranian crude may 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.

According to Falih, the kingdom would 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.