According to Reuter’s, the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC partners met in Abu Dhabi last Sunday. They met to discuss a potential proposal to reduce oil supply by 1.4 million barrels per day in order to raise oil prices out of its current market position. Reuter’s gained this knowledge from three sources close to the talks.
One of those sources said reducing the oil supply was just one of the options proposed by the OPEC/non-OPEC joint committee meeting in Abu Dhabi. That source added that OPEC member Iran and non-OPEC group leader Russia are not totally convinced in supporting that proposal.
“I believe a cut of 1.4 million bpd is more reasonable than above it or below it,” one source told Reuters.
OPEC said the state of the oil market is reviewed by the Joint Technical Committee (JTC) which is made up of members from both OPEC/non-OPEC Joint Ministerial Monitoring Committee (JMMC) groups. Following Sunday’s meeting of the JMMC, they said that it is the JTC’s job to propose “options on new 2019 production adjustments, which may require new strategies to balance the market.”
Khalid al-Fatih, the Energy Minister of OPEC’s de facto leader Saudi Arabia, said on Monday, “There will need to be a reduction of supply from October levels approaching a million barrels.” His conclusion is based on OPEC’s, JTC’s technical analysis.
Russia’s official position is to be cautious and not make hasty decisions, even though al-Falih repeated, “We need to do whatever it takes to balance the market.”
After the Abu Dhabi meeting, Russia’s Energy Minister, Alexander Novak said that his country prefers the partners to keep on monitoring the market situation. He said they also discussed continuing the cooperation between the members into 2019.
“We need to look at the situation very carefully to see how it will develop so that we don’t end up changing our course by 180 degrees every month,” Russia’s Novak told CNBC on Sunday.
Then on Monday, Novak told Bloomberg, “We are not excluding cuts,”but he also made note that they would not want cutting back on production to be the only measure to stabilize the oil supply market.
After a 7-percent fall to one-year lows on Tuesday, oil prices began to cautiously rise early on Wednesday, following reports of OPEC and its allies discussions about a 1.4 million bpd cut.