Economy

Russia: Production Cuts Are Needed To Stabilize Oil Markets

Russia: Production Cuts Are Needed To Stabilize Oil Markets

Saudi Arabian Energy Minister Khalid Al-Falih and Nigerian Energy Minister Emmanuel Ibe Kachikwu told the press in Abuja that there were confident that OPEC and its allies would succeed in stabilizing crude oil prices.

Fundamentally, investors remain concerned about the continuous flow of USA supply along with new worries that Saudi Arabia is insisting that it will not cut production on its own to stabilize supply and prices.

Russia's energy ministry is discussing potential oil production cuts with local producers and will continue talks to come up with a position by the OPEC/non-OPEC meeting in early December, Energy Minister Alexander Novak said last week. With fears of a scarcity now giving way to worries about oversupply, the Organisation of Petroleum Exporting Countries and allies such as Russian Federation are preparing to discuss more cuts when they meet next week in Vienna. Both contracts are up about 1 percent this week, the first weekly gains in nearly two months.

In November 2014, Saudi Arabia chose to maintain production and allow prices to fall, which temporarily halted the US shale boom but wrecked the kingdom's finances and pushed its economy into recession.

Saudi Arabia knows full well that it needs to bank on the United States support at the hard moment when its role in Khashoggi killing earned it global condemnation.

"We are going to.do whatever is necessary, but only if we act together as a group of 25", Falih told reporters, referring to the Organization of the Petroleum Exporting Countries and its allies.

Oil rose above $50 a barrel in NY, erasing an earlier loss, after a report that Russian Federation accepts the need to cut production in conjunction with OPEC. "However, we might see some movement on global trade issues at the G20 meeting which starts on Friday", said Michael McCarthy, chief strategist at CMC Markets and Stockbroking.

More news: First lady unveils White House 2018 Christmas decorations

Before the OPEC meeting, the world's top three producers - the United States, Russia and Saudi Arabia - will be part of a meeting this weekend of the Group of 20 industrialised nations in Buenos Aires, Argentina.

"OPEC needs to cut if it wants the market to be a little less oversupplied in the first half of 2019", said Petromatrix analyst Olivier Jakob.

The global benchmark for crude, Brent futures that expire in January were down by 2.4% to trade at a price of $58.76 per barrel on the ICE Futures Europe Exchange in London.

Nigeria and Libya were excluded from the previous cuts because of production declines caused by unrest, though their output has now recovered.

Moscow agreed to curb output by 300,000 barrels per day, or one sixth of the overall cut of 1.8 million bpd, but Russian companies took several months to reach that level of reduction.

This story has been published from a wire agency feed without modifications to the text.