President Trump pressuring OPEC to increase oil production ahead of crucial meeting

Friday, 07 Dec, 2018

The group is under pressure after a collapse in oil prices last month.

The WTI Crude Oil market fell rather hard during trading on Thursday, slamming into the $50 level yet again as OPEC concluded their meeting without announcing any new cuts. Crude prices have slid since October amid high rates of production in countries such as the USA and Saudi Arabia.

He further added that the Saudi's are comfortable with the current oil price but confirmed that there had been no decision on an output cut yet.

USA oil prices were little changed after the news.

Saudi Arabia is equally prepared for a deal or no-deal situation, Al-Falih said.

While the net balance shows the United States is selling more petroleum than buying, American refiners continue to buy millions of barrels each day of overseas crude and fuel.

"We continue to re-tool our export infrastructure along the Gulf Coast to expand capacity, and you continue to see strong demand globally for crude oil". Another factor is surging USA production, which has reached record highs of 11.5mb/d, or more than a 10th of global output, a figure that is expected to rise further in 2019.

Saudi Arabia, the heavyweight within OPEC, said Thursday it was in favor of a cut of about a million barrels a day.

Nonetheless, Saudi Arabia is in a delicate position, in the wake of the murder of opposition journalist Jamal Khashoggi.

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Ann-Louise Hittle, vice president, macro oils, at consultancy Wood Mackenzie said: "We expect the group to agree to a production cut lasting until at least the first half of 2019".

Otherwise, he added, the United States official has adopted an unprofessional, naïve, and meddlesome approach.

Russian energy minister Alexander Novak is understood to have flown back from Vienna earlier today for possible talks with President Vladimir Putin.

The last time the OPEC+ group agreed to curtail output, in late 2016, it settled on a combined 1.8 million-barrel-a-day reduction.

"I'm hopeful that everyone in and even outside the organisation will be supportive to whatever requirements we need to do to balance the market", he said.

Zanganeh said the estimated surplus now on the market amounted to 1.3-2.4 million barrels per day.

On paper, the shift to net oil imports means that the USA is today energy independent, achieving a rhetorical aspiration for generations of American politicians, from Jimmy Carter to George W. Bush.

The US, not a member of OPEC but a significant oil producer itself, has repeatedly called for oil prices to stay low, with Trump using Twitter several times to make the point.

Qatar, a Saudi rival and Iranian ally, said this week it would leave OPEC in January. Saudi Arabia is the de facto leader of OPEC so its opinion goes a long way, however, due to the critical nature of this decision, it is likely to wait for Russia's opinion which may come later in the day.