Oil producers to consider cuts after price slide

Saudi Arabia discussing proposal to slash oil output

November 12, 2018 00:00:00

DUBAI, Nov 11 (Agencies): Major oil producers meet in Abu Dhabi on Sunday to consider reverting to output cuts after a sharp slide in crude prices revived fears of a 2014-style crash.

Oil prices shed a fifth of their value in just one month after surging to a four-year high in early October, driven by a combination of factors centred on higher supply and fears of sluggish demand.

Brent crude dropped below $70 a barrel on Friday for the first time since April while the New York's West Texas Intermediate (WTI) sank below $60 a barrel, a nine-month low.

The United States has upped production of shale oil, while Saudi Arabia, Russia and others have raised supplies of crude amid signs of slowing demand.

The slide also comes during signs of a softer-than-expected impact from US sanctions on Iran oil exports.

"Prices have been falling amid a continued rise in crude supplies from big producers, such as Saudi Arabia, Russia and the US, more than compensating for lost Iranian barrels," Forex.com analyst Fawad Razaqzada said.

Energy ministers of top producers Russia and Saudi Arabia will join other OPEC and non-OPEC officials for the meeting of the Joint Ministerial Monitoring Committee, which oversees production levels.

Meanwhile, the Kingdom of Saudi Arabia (KSA) is discussing a proposal to cut oil output by up to 1 million barrels per day by OPEC and its allies, two sources close to the discussions told Reuters on Sunday.

The sources said the discussions were not finalised as much depended on the reduction in Iranian exports.

"There is a general discussion about this. But the question is how much is needed to reduce by the market," one of the sources said, speaking in Abu Dhabi where a market monitoring committee is due to be held on Sunday, attended by top exporters Saudi Arabia and Russia.

Asked by reporters in Abu Dhabi if the market is in balance, Saudi Energy Minister Khalid Al-Falih said: "We will find out. We have our meeting later."

Al-Falih last month said there could be a need for intervention to reduce oil stockpiles after increases in recent months.