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Saudi Minister: No Plans to Break Up OPEC

Saudi Minister: No Plans to Break Up OPECSaudi Minister: No Plans to Break Up OPEC

Saudi Arabia is not preparing for a break up of OPEC and believes the group will remain the global central bank for oil for a long time, Saudi Energy Minister Khalid al Falih said on Monday. 
Saudi Arabia’s top government-funded think-tank has been studying the possible effects on oil markets of a breakup of OPEC, the Wall Street Journal reported on Thursday, citing people familiar with the matter, Reuters reported.
Falih said the think-tank was just trying “to think outside the box” and analyze all scenarios but added that the Saudi leadership has “no consideration whatsoever to eliminate OPEC.” 
Saudi Arabia has also expressed the need for oil producers to cut 1 million barrels a day from October levels and announced fewer shipments from next month, as OPEC and its allies began laying the groundwork to reduce oil supply in 2019, reversing an almost year-long expansion.
The desert kingdom will export 500,000 fewer barrels a day in December than this month, taking the lead in OPEC to counter the price rout battering the finances of group members and energy companies alike.
 While a meeting with other producers on Sunday yielded no change in supply policy, OPEC+ warned in a statement that it might need “new strategies,” raising the prospect of a wider and coordinated cut in 2019.
“We are going to do everything we can to keep inventories and supply demand fundamentals within a reasonably narrow band around balance, and we believe markets will calm down,” Falih said Monday in a speech at an industry event in Abu Dhabi. 
“We are not in the business of pinpointing a price going forward.” 

 

Pressure Mounting on OPEC+

Oil collapsed into a bear market in little more than a month, and pressure is mounting on the OPEC+ group to act sooner than their policy meeting in December. 
The producers need prices that are high enough to balance their budgets and low enough to stimulate demand and shield themselves from attacks from the White House, all while they contend with wild swings in supply as sanctions hit OPEC member Iran.
Although there are signs of a glut emerging in the US, the Saudi minister said Sunday it was too early to talk about coordinated production cuts within OPEC+. 
Counterparts from Russia and the United Arab Emirates echoed that sentiment. 
The group’s caution arises partly from the unpredictability of Iranian supply. 
The US at first insisted it would seek to curtail all of the country’s exports, only to grant waivers to eight of its customers just as Washington reimposed sanctions this month. That confounded a market that was anticipating a stricter enforcement.

 

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