No oil output cut: Saudi official

Saudi Arabia’s oil minister said Tuesday that production cuts to boost oil prices won’t work, and that instead the market should be allowed to work even if that forces some operators out of business.

OPEC member Iran, which al-Naimi didn’t call out by name when prodded, just got is US-imposed economic sanctions lifted and really, really wants to start start sending more oil overseas. An accord last week to freeze the oil production of Saudi Arabia, Russia, Qatar and Venezuela at January levels is “not like cutting production, that’s not going to happen”.

Analysts quickly viewed OPEC’s announcement with skepticism, arguing that increasing production from OPEC members Iraq and Iran, as well as the stubborn production coming out of USA shale-oil companies, would keep the market oversupplied.

More meetings on the potential freezes will be held in March, Al-Naimi told the IHS CERA week conference in Houston, adding that he expects most of the countries that count to freeze crude production levels.

On the Intercontinental Exchange, brent crude for April delivery traded between $33.10 and $35.09 a barrel, before closing at $33.24, down 1.43 or 4.18% on the session.

The Organization of Petroleum Exporting Countries, which controls about 40 percent of global oil production, has never had to deal with an oil supply source that can respond as rapidly to price changes as USA shale, El-Badri said. “It’s going to take time”, Naimi said.

“Some neighbouring countries have increased their production over the years to 10 million barrels per day and export this amount, then say let’s all freeze our oil production”, Zanganeh said. Al-Naimi said on Tuesday he believes more countries are likely to agree to freeze output as early as next month.

Nigeria, Africa’s biggest oil producer, has been suffering from a slump in crude prices that has eroded vital oil revenues and hammering its currency.

Just a couple short months ago OPEC production cuts were getting bandied about (some of which were allegedly Saudi Arabia’s idea), but those days appear to be over.

The reproduction of the story/photograph in any form will be liable for legal action.

He said the kingdom welcomed “all sources of supply”, including shale. But Iran’s return couldn’t have come at a worse time for an oil market already drowning in excess supply. The resilience of the shale sector and increase in Russian production to post-Soviet highs helped expand the global glut.

Additionally, Petrobras, the Brazil-based state-operated oil and gas company, is considering closing several onshore drilling rigs in Brazil as oil prices continue to fall and the company struggles to lower its debt, which is the largest among oil companies, according to Reuters.