Saudi Arabia: OPEC seeking 'sufficient cut' to balance oil market

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To raise prices, OPEC members, who account for more than half of the world's oil output, will spend the next two days evaluating whether to renew their cooperation with Russian Federation and other non-cartel producers, or simply slash production further.

OPEC members are meeting in Vienna to discuss ways to raise global oil prices.

He tells reporters the nations are "after a stable market and also a fair price for the producers as well as the consumers".

This was the first drop in US crude stocks since September, and it came as exports surged to a record 3.2 million barrels per day (bpd).

The Organisation of the Petroleum Exporting Countries (Opec) has made a planned cut in oil production effectively conditional on the contribution from non-Opec producer Russian Federation, delegates said on Thursday as the group gathered in Vienna for a meeting aimed at supporting battered oil prices. "This sits against a backdrop of rapid non-OPEC production growth - 2.4 million barrels per day year-on-year in 2018 and 2019, due mostly to gains in the USA output over both years".

A pumpjack operates above an oil well at night in the Bakken Formation on the outskirts of Williston, North Dakota, U.S., on Thursday, March 8, 2018.

The Saudi minister pointedly said Washington should back off.

"While the large crude oil inventory drop was notable, the surge in exports of crude oil to over 3 million barrels per day was remarkable", said John Kilduff, partner at energy hedge fund Again Capital LLC in NY. The price of both benchmark United States crude and the standard for internationally traded oil fell 22 per cent in November.

"Yes, we will have a cut", Oman's oil minister Mohammed bin Hamad Al Rumhi said on Wednesday evening.

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"Hopefully, OPEC will be keeping oil flows as is, not restricted".

Crude prices have been falling since October because major producers - including the US - are pumping oil at high rates, and due to fears that weaker economic growth could dampen energy demand.

Saudi Arabia, the de facto head of the cartel, finds itself in an especially delicate position in the wake of the murder of journalist Jamal Khashoggi. "We just have to see how it will be distributed", another delegate said.

Yet, shale production can still grow at oil prices that are not sufficient to balance the budgets of OPEC producers, Texas oil and gas economist Karr Ingham told Reuters.

Qatar, a Saudi rival and Iranian ally, said this week it would leave OPEC in January.

"The stakes are high now for OPEC". Whether to exempt Iran from making any cuts was one sticking point in the meeting, said a delegate.

OPEC is also riven by internal conflict, particularly the rivalry between Saudi Arabia and Iran.

Russia's big oil companies are close to the government and the dominant firm in Saudi Arabia - Saudi Aramco - is state-owned.

The American transformation from a net importer to exporter is a direct result of the expanding USA oil industry; with "thousands of new wells" appearing in Texas, New Mexico, North Dakota, and Pennsylvania.

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