Major oil producers foresee oversupply, edge closer to production cuts

OPEC and its allies meet under mounting pressure to consider renewed production cuts after a slump in oil prices

OPEC and its allies meet under mounting pressure to consider renewed production cuts after a slump in oil prices

Global oil supply has increased by 3.3% in 2018, while non-OPEC supply is growing faster and USA oil production is up in the double digits.

Benchmark Brent crude, which had been trading above $80 a barrel recently, now hovers just over $70 after the USA sanction waivers on Iran.

Oil prices are staging a comeback, driving Brent crude oil above $70 following an announcement from the kingdom of Saudi Arabia indicating that the world's major crude producers plan to cut supply significantly in 2019.

UAE energy minister Suhail Al Mazrouei said other factors such as a stronger dollar and the risk of trade wars posed significant threats to the global oil markets as much as an impending supply glut.

An official from Kuwait, also an OPEC member, on Monday said that major oil exporters over the weekend had "discussed a proposal for some kind of cut in (crude) supply next year", although the official did not provide any detail.

The Saudis are taking the lead in an attempt to counter a price slide of about 20% since early October, which reflected USA waivers that tempered the impact of sanctions on Iran, as well as signs of an emerging glut in America.

In June, Saudi Arabia persuaded fellow oil producers to end 18 months of production cuts and pump more crude in response to falling output in Venezuela and Iran.

The world's second and third crude producers - after they were overtaken by the United States thanks to shale oil - Russian Federation and Saudi Arabia are the core of an alliance of producer nations that succeeded in solidifying oil prices after the 2014 crash. Novak showed no sign he was ready to act immediately and Vagit Alekperov, the CEO of Russia's second-largest oil producer Lukoil PJSC, said there's no need to cut output now. He also said oil prices should be much lower based on supply.

Meanwhile, Sultan Ahmed al-Jaber, the head of the state-run Abu Dhabi National Oil Co., said the UAE planned to increase oil production to 4 million barrels of oil a day by 2020 and 5 million barrels a day by 2030. Beyond demand concerns, a big concern for Saudi Arabia and other traditional producers from West Asian-dominated OPEC is the surge in United States output.

The oil producers have made a decision to act after oil dropped as much as 20 percent in one month, after hitting a four-year high in early October.

Other oil-market news Gasoline futures rose 1.5% to settle at US$1.6367 a gallon.

Friday marked the 10th consecutive day crude oil prices fell.

Saudi Energy 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.

The market should be balanced by the middle of next year, though there are forecasts for a surplus of 1 million to 1.4 million barrels a day, he said.

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