On Sunday, the main oil producing countries called to adopt a “new strategy” based on an adjustment of production to deal with the imbalance between supply and demand in the market.
At the end of a meeting in Abu Dhabi, oil producers indicated that they noted that in 2019 the production growth will be higher than the world demand, and therefore they would study “the options to do production adjustments that might require new strategies to balance the market.”
Saudi Energy Minister Jaled al Faleh announced that his country, the world’s leading oil producer, would reduce its exports of 500,000 barrels per day in December.
Russia promised to comply with any new agreement that would limit production.
The energy ministers of Russia, Saudi Arabia, Kuwait, Venezuela and the United Arab Emirates participate in the meeting. Russia, a major producer and exporter of hydrocarbons, was the only OPEC non-member country.
At the end of the meeting, no decision was made. According to several ministers, recommendations should be issued before an OPEC plenary meeting on December 5th in Vienna.
Due to an increase in the production of some of the major oil countries, and the fear of falling demand, crude oil prices have lost about 20% in a month, having reached the highest level in October, when Riyadh had increased its production to 10.7 million bd (mbd), against 9.9 mbd in May. About two-thirds of Saudi crude goes to export.
The price of a barrel of Brent had fallen below $70 on Friday for the first time since April, and the price of the New York barrel WTI was below $60.
Despite signs of demand falter, Saudi Arabia, Russia, Kuwait and Iraq recently increased their crude production, and the United States did the same with shale oil.
The recent drop in the price of oil is the result of a drop in demand in China, the largest importer on the planet, which is slowing its growth, according to Cailin Birch, an analyst at The Economist Intelligence Unit.
In addition, US sanctions against Iran, which threatened to reduce world supply and raise prices, seem to be less severe than expected.