Oil production cuts under consideration
OPEC and allied oil-producing countries will likely need to cut crude supplies, perhaps by as much as one million barrels of oil a day, to rebalance the market after US sanctions on Iran failed to cut Tehran's output, Saudi Arabia's energy minister said Monday.
The comments from the minister, Khalid al-Falih, show the balancing act the United States allies face in dealing with President Donald Trump's actions related to the oil industry.
Trump in recent weeks demanded the oil cartel increase production to drive down US gasolene prices. "Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!" he tweeted Monday.
The US has meanwhile allowed some of its allies - Greece, India, Italy, Japan, South Korea, Taiwan and Turkey - as well as rival China to continue to purchase Iranian oil despite reimposed sanctions, as long as they work to reduce their imports to zero.
Al-Falih, who on Sunday said the kingdom would cut production by over 500,000 barrels per day in December, said Monday at the Abu Dhabi International Petroleum Exhibition & Conference that Saudi Arabia had been giving customers "100 per cent of what they asked for". That appeared to be a veiled reference to Trump.
Al-Falih said OPEC officials have seen analysis papers suggesting a production cut of upward of one million barrels of crude a day may be necessary to rebalance the market. However, he stressed that more study needed to be done.
"There are a lot of assumptions in their projections that may change," al-Falih said. "We don't want to throttle the global economy."
A gallon of regular gasolene in the US, on average, now sells for US$2.69, down from US$2.90 a month ago, according to AAA. Production cuts could again boost prices at the pump.
Neither al-Falih nor al-Mazrouei directly criticised Trump, but Mohammed Hamad al-Rumhy, Oman's oil and gas minister, blamed the US president for some of the volatility striking the oil market. Oman, a sultanate on the eastern edge of the Arabian Peninsula, maintains close diplomatic ties to Iran and often serves as an interlocutor between Western powers and Tehran.
"Supply and demand is perhaps the easy part because you can measure it," al-Rumhy said. It's "extremely difficult to quantify what is happening in (the) White House - almost impossible".
Iran, which has tense relations with Abu Dhabi, the capital of the UAE, did not have a high-level official at the summit.
Crude oil dropped to a low of US$30 a barrel in January 2016. That forced OPEC to partner with non-OPEC countries, including Russia, to cut production to help prices rebound.
Benchmark Brent crude, which had been trading above US$80 a barrel recently, now hovers just over US$70 after the US sanction waivers on Iran.
Meanwhile, Sultan Ahmed al-Jaber, the head of the state-run Abu Dhabi National Oil Company, said the UAE planned to increase oil production to four million barrels a day by 2020 and five million barrels a day by 2030. The UAE now produces some three million barrels of oil a day.