Saudi Arabia's energy chief comments on optimal volume of oil cuts

VIENNA, December 6. /TASS/. Minister of OPEC countries who considered recommendations of the ministerial monitoring committee on reduction of oil production in Vienna, could support reducing production by 1 mln barrels per day, Minister of Energy, Industry and Mineral Resources of Saudi Arabia Khalid Al-Falih told reporters.

"I think a million would be ideal," Al-Falih said, adding that he has heard various versions of the volume ranging from 500,000 to 1.5 mln barrels.

Talking about Russia’s cut, Al-Falih said "That depends on everybody else. Russia is one variable in a very complex format." However, Al-Falih believes that there should be no exceptions in OPEC+ decision for any countries. "My preference is no exceptions," he said.

"We believe that the work that we do is good for member countries, it is going to be good for all producers, and good for consumer," he said.

The Minister considers extending oil output cuts until the Q3 2019 optimal. "Ideally, it would be until the third quarter," he said. At the same time, he did not rule out that the risk that countries would not be able to come to a consensus.

According to the Minister, reducing production from the level of October would be optimal. However, Saudi Arabia would prefer "November as a baseline" for oil reduction.

The minister added that Saudi oil exports in November reached 8.3 mln barrels per day, while production amounted to 11.3 mln barrels. At the same time, he confirmed that in December, as was promised earlier, exports will fall by 0.5 mln barrels.

A source in OPEC told TASS that on the meeting on Wednesday, the OPEC+ monitoring committee recommended reducing production by 1 mln barrels per day from the level of October. The Minister of Oil of Oman Mohammed Al Rumhi then confirmed this volume.

OPEC ministers at a meeting on December 5-7 in Vienna are discussing the possibility of reducing production in 2019 to avoid oversupply due to increased production in the United States and easing sanctions against Iran. The negotiations were difficult due to the fact that the participants could not agree on the volume of reductions and the base cut-off level, sources told TASS.

Russia was ready only for a symbolic reduction, which was the main difficulty for the other parties to the agreement.

A source told TASS, ministers at the talks on Wednesday were inclined to prolong the current deal, retaining the parameters set in October 2016, which means abolishing the June decision to increase production by 1 mln barrels per day. However, in the six months since that decision, Russia and Saudi Arabia have increased production by almost 1.5 mln barrels per day.