Oil producing countries should cut output by one million barrels per day to re-balance the market, Saudi Arabia's energy minister said Monday, following a drop in crude prices.
"The technical analysis we reviewed yesterday shows that we need a reduction approaching one million bpd to balance the market," Khalid al-Falih told an energy conference in Abu Dhabi.
Falih said Saudi Arabia, the world's largest oil supplier, will cut its production by 500,000 bpd as of next month to help stabilize the market.
Falih on Monday said there had been a marked buildup in inventories, adding that "the 25 producers will not allow this to continue" and that there were "signals" they would do "whatever it takes to balance the market".
On Sunday, Falih had announced plans by Saudi Arabia to reduce oil supply to world markets by 500,000 bpd in December as the country faces uncertain prospects in getting other producers to agree to a coordinated output cut.
Falih told reporters that state oil company Saudi Aramco's customer nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand. The cut represents a reduction in global oil supply of about 0.5 percent.
Russian Energy Minister Alexander Novak sai he was not certain the market would be oversupplied next year.
He added that the oversupply for the next few months would be seasonally driven while by mid 2019 the market could be balanced again and demand could even exceed supply.
A majority of OPEC and allied oil exporters support a cut in the global supply of crude, Oman Oil Minister Mohammed bin Hamad al-Rumhi said on Sunday.
“Many of us share this view,” the minister said when asked about the need for a cut. Asked if it could amount to 500,000 or one million bpd, he replied: “I think it is unfair for me to throw numbers now,” Reuters reported.
“We need a consensus,” he said, indicating that non-OPEC Russia would need to approve any decision. Oman is also not a member of OPEC.
