As noted by The Globe and Mail, Saudi Arabia is set to go ahead with plans to begin clamping down on oil production, wiping up to half a million barrels per day off of their outflows in an effort to put a floor underneath crude’s recent declines.
“Saudi Arabia plans to reduce oil supply to world markets by 0.5 million barrels per day in December, its energy minister said on Sunday, as the OPEC power faces uncertain prospects in its attempts to persuade other producers to agree a coordinated output cut.
Khalid al-Falih told reporters that Saudi Aramco’s customer crude oil nominations would fall by 500,000 bpd in December versus November due to seasonal lower demand. The cut represents a reduction in global oil supply of about 0.5 per cent.
Saudi Arabia has increased output by just about 1 million bpd this year under pressure from U.S. President Donald Trump and other consuming countries to help balance the market to compensate for lower supplies from Iran due to U.S. sanctions.
But since Iran’s customers were given generous waivers to continue buying crude, concerns grew about market oversupply and oil prices fell to below US$70 per barrel on Friday from US$85 a barrel in October.
“We have been increasing production in response to demand,” Falih told reporters in Abu Dhabi ahead of a joint OPEC, non-OPEC market monitoring committee meeting.”