Oil prices rise as Saudi Arabia signals production cut

Oman oil minister says majority of OPEC and its allies support cut

Saudi Arabia's energy minister said oil-producing nations should cut output by one million barrels per day to re-balance the market.

Before the United States re-imposed sanctions on Iran, "fear and anxiety gripped the market", al-Falih said at the Abu Dhabi International Petroleum Exhibition & Conference.

However, market participants say the global energy market could see another period of excessive supply of crude oil as soon as next year - with oil bulls looking at Bakken anxiously.

"We're kind of back to square one: It must feel like November 2016 to them, a lot", said John Kilduff, a partner at Again Capital Management in NY, referring to the time period when OPEC and its allies agreed to initiate production cuts.

UAE energy minister Suhail Al Mazrouei said other factors such as a stronger dollar and the risk of trade wars posed significant threats to the global oil markets as much as an impending supply glut.

"I would not want to focus purely on production cuts", Russian Energy Minister Alexander Novak said in a Bloomberg television interview.

Note that although the Iranian sanctions have taken effect, the American Government has now given waivers to eight of the country's customers, thereby going against its earlier insistence on cutting off all of Iran's oil from the global oil market.

Producers implemented large cuts starting at the beginning of 2017 and managed to push up oil prices from below $30 a barrel to over $85 in October, strongly improving their revenues.


The energy minister of the United Arab Emirates, Suhail al-Mazrouei, now the president of OPEC, said "changes" likely would be necessary as the oil cartel meets in December in Vienna.

The two countries have also clashed over the October killing of USA -based journalist Jamal Khashoggi at the Saudi consulate in Istanbul, with the Trump administration reportedly considering sanctions on some Saudi officials in response.

The kingdom's energy minister, speaking after a meeting of Opec at the weekend, said the cartel believed that production would need to fall by almost 1m barrels per day (bpd) on October levels.

Even as the Saudis floated the possibility of a cut in production, the selling has not abated.

He was asked if the group should act to stabilise oil prices when it meets with non-Opec member states on December 5 in Vienna, Austria to review the current world supply of oil.

US President Donald Trump, however, did not like the rhetoric coming from his political ally in Saudi Arabia.

Brent crude, the global benchmark, rose 1.2 percent to $70.99 a barrel at 10:55 a.m. Singapore time.

"I think we would have to wait and see how the market is unfolding because our ultimate goal is market stability". However, the USA has granted waivers to certain major importers of Iranian crude, diminishing the expected cuts.

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