Saudi Energy Minister: Oil Market Would Balance Even Without Output Cuts

Cartel members, including Saudi Arabia, have been expecting that Russian Federation will eventually join a reduction, but on Thursday its energy minister, Alexander Novak, stated that his nation’s position “has remained unchanged and consistent: as our president said earlier, we are ready to freeze production at the current levels”.

This, OPEC´s 14 members hope, will reduce the mammoth global supply glut and so increase the market price of oil from its current painful level of below $50 a barrel.

Oil prices fell more than two per cent on Friday, dragged down by uncertainty over whether OPEC would reach an output deal, after Saudi Arabia said it would not attend talks on Monday with non-OPEC producers to discuss supply cuts.

He said the cuts could push prices up to $60 per barrel by the end of the year.

The two ministers discussed each country’s share of the proposed cut and Zanganeh said Iran will assess the proposal and discuss it further at the Vienna meeting on November 30, the official said.

On Sunday, Iranian official Mehr News had accused the world’s largest crude oil producer (Saudi Arabia) of playing spoilsport by deciding to stay away from the Monday meeting between OPEC and non-OPEC members, saying a consensus among OPEC producers on output was a pre-requisite to implementable decisions.

His statement was followed by comments from Azerbaijan Energy Minister Natig Aliyev, who wrote in a local newspaper that he thinks OPEC will probably propose other producers cut their oil production by 880,000 barrels per day for six-months starting from January 2017. Iraq has said it will participate in output curbs, having initially resisted joining in, yet it’s not clear by how much it’s prepared to cut production. Saudi Arabia, the group’s de facto leader, is seeking to reverse the pump-at-will policy it supported in 2014 and is now pushing members to agree how they will individually shoulder the first production cuts in eight years.

Besides disagreements with Iran and Iraq, Saudi Arabia has also signalled it was unhappy with Russia’s position.

Also feeding into oil trading sentiment was a slightly higher greenback.

In recent weeks, Riyadh offered to cut its own output by 0.5 million bpd, according to OPEC sources, and suggested Iran limit production at below 4 million bpd.

A similar OPEC and non-OPEC meeting in October resulted in no specific pledges from outside producers to cut output, with attendees citing the lack of an internal OPEC agreement.