OPEC, non-OPEC producers agree to 1.2 million-b/d cut
The Organisation of Petroleum Exporting Countries concluded a two-day meeting in Vienna on the 7th December with an agreement to cut 800,000 b/d of production, while ten non-OPEC countries agreed to cut 400,000 b/d.
The countries of Iran, Libya, and Venezuela were exempted from the production cuts, which will be effective for six months starting the 1st January 2019. The cuts will be based on October 2018 production levels.
OPEC and non-OPEC delegates said they discussed increasing market volatility. They reached consensus that prospects for 2019 suggests higher oil supply growth than world oil requirements.
Energy ministers also noted world economic growth outlook for 2019 is slightly lower than for 2018.
During a news conference after the OPEC meeting, Saudi Arabia Energy Minister Khalid al-Falih was asked about US President Donald Trump’s tweet on the 5th December in which he said: “Hopefully OPEC will be keeping oil flows as is, not restricted. The world doesn’t want to see, or need, higher oil prices.”
Mr Al-Falih said the relationship between the US and Saudi Arabia goes back 70 years and is built on shared interest and values to work together. Mr Al-Falih noted US oil production is rising.
“Low oil prices are actually not good for the US economy,” Mr al-Falih said. “We honour him for his focus on the US consumer.”
Oil price benchmarks climbed to two-week highs on the 7th December immediately after OPEC and its allies agreed to the cuts next year.
OPEC delegates said they agreed to continue working with non-OPEC delegates as outlined in a Declaration of Cooperation that was first negotiated two years ago.
The conference also elected Manuel Salvador Quevedo Fernandez, Venezuela’s Minister of Petroleum, as OPEC president starting the first of the year.
Source: Oil & Gas Journal