BREAKING NEWS Student enrollment, aging buildings, and Chromebooks; The Vigo County School Corporation holds its State of the Schools address Full Story

Saudi Arabia is reducing oil supply and OPEC may cut too

Article Image

Among the reasons for the plunge in prices is an increase in oil production by US shale producers and Saudi Arabia. CNN's Paul R. La Monica reports.

Posted: Nov 13, 2018 7:48 AM

Saudi Arabia will reduce oil supply next month in response to lower demand, and more cuts could follow next year.

Speaking at a conference in Abu Dhabi, Saudi energy minister Khalid Al Falih said the kingdom's oil output would fall by 500,000 barrels per day in December.

Members of the Organization of Petroleum Exporting Countries (OPEC) and its allies could reduce supply further next year if needed, he added.

"The consensus among all members is that we need to do whatever it takes to balance the market," Al Falih said. "If that means trimming supply by a million [barrels per day], we will do it."

Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak. Fear of a global economic slowdown and a decision by the United States to allow some countries to keep buying Iranian crude oil following the reintroduction of sanctions have hit market sentiment.

BP (BP) CEO Bob Dudley said the Saudi cut represented "quite a bit of oil."

"That probably would adjust sentiment and get [prices] back into a corridor with less volatility," he told CNN Business.

A senior OPEC source said the cartel and other major producers are discussing cutting production by as much as 1.2 million barrels per day. A decision could be taken at the next OPEC meeting in Vienna on December 6.

A cut of that magnitude would reverse a decision in June by OPEC and Russia to pump over a million barrels per day more to make up for the expected loss of Iranian exports.

"The size of any potential cut will depend on how much oil demand growth slows down, how much Iranian supply falls due to US sanctions, and how fast US supply rises," said Giovanni Staunovo, an analyst at UBS.

Russia appears to need more convincing that it should be cutting production.

Russia's energy minister Alexander Novak said in Abu Dhabi on Sunday it was too early to make a decision to reverse course and cut supply.

"We're going to do everything we can to keep supply and demand inventories within a reasonably narrow band, " Al Falih said on Monday, during a debate moderated by CNN Business' Emerging Markets Editor John Defterios. "We hope that markets will calm down."

Crude prices jumped by as much as 2% on the prospects of reduced supply from OPEC. US crude oil futures were trading around $60.80 per barrel, $1.50 higher than on Friday.

The United States last week said eight jurisdictions — China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey — would be able to continue buying Iranian oil for six months without fear of US penalties under sanctions on trading with Iran.

"The sanctions on Iran have turned out to be a damp squib for the time being with the Trump administration granting exemptions," said Devesh Mamtani, head of investments and advisory at Century Financial, a brokerage firm in Dubai. "The exemptions have even surprised Saudi Arabia as oil supplies from Iran are likely to spike in the coming days," he added.

UAE energy minister Suhail Al Mazrouei, who is also OPEC president, said the cartel wouldn't allow the market to become oversupplied.

"We will assure you that when we meet in December we will go to the market with the solution that will ensure market stability," he said.

Scroll for more content...

New York

Confirmed Cases: 366733

Reported Deaths: 29529
CountyConfirmedDeaths
New York City20105121415
Nassau401402114
Suffolk393591871
Westchester332931357
Rockland13076626
Orange10325443
Erie5886504
Dutchess3867138
Monroe2824198
Onondaga2054127
Albany181476
Ulster165874
Sullivan135130
Putnam123658
Niagara98463
Oneida95946
Schenectady67629
Broome54544
Rensselaer46928
Saratoga46811
Columbia38032
Madison31010
Warren25326
Steuben24141
Greene23618
Washington23113
Orleans21233
St. Lawrence2012
Ontario2019
Fulton20018
Genesee1974
Tompkins1560
Chemung1361
Tioga12621
Chenango1260
Livingston1187
Wayne1123
Oswego1073
Herkimer1063
Clinton954
Cattaraugus850
Cayuga841
Montgomery824
Wyoming825
Chautauqua814
Delaware784
Jefferson720
Otsego705
Seneca560
Schoharie490
Allegany450
Yates396
Cortland390
Essex360
Lewis200
Franklin200
Schuyler110
Hamilton50
Unassigned00

California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 103813

Reported Deaths: 3993
CountyConfirmedDeaths
Los Angeles498602241
Riverside7341313
San Diego7100260
Orange5744142
San Bernardino4914190
Alameda309794
Santa Clara2701140
San Francisco243740
San Mateo202282
Kern200737
Tulare183580
Fresno165832
Santa Barbara163612
Imperial144326
Contra Costa138437
Sacramento134956
Ventura106232
San Joaquin84235
Kings7043
Stanislaus68328
Sonoma5304
Solano50922
Monterey4699
Marin43614
Merced2807
San Luis Obispo2681
Yolo20723
Santa Cruz2062
Placer1969
Napa1113
Humboldt983
Madera942
San Benito852
El Dorado840
Del Norte440
Sutter422
Nevada411
Butte400
Shasta374
Mono351
Yuba281
Mendocino250
Lake230
Inyo191
Mariposa161
Calaveras150
Glenn140
Amador100
Siskiyou60
Colusa50
Lassen50
Tuolumne40
Plumas40
Tehama41
Alpine20
Trinity10
Sierra10
Unassigned00

Oregon Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 4086

Reported Deaths: 151
CountyConfirmedDeaths
Multnomah110359
Marion93125
Washington71517
Clackamas30411
Deschutes1210
Linn1159
Umatilla1143
Polk9811
Yamhill697
Lane672
Jackson650
Benton555
Clatsop450
Klamath410
Malheur330
Coos310
Douglas250
Jefferson250
Josephine251
Wasco211
Columbia160
Hood River130
Morrow120
Lincoln100
Crook60
Curry60
Union60
Tillamook60
Wallowa20
Lake20
Sherman10
Harney10
Grant10
Baker10
Unassigned00