Saudi Arabia, the world's biggest oil exporter, has offered to cut its output to January levels, Algeria's energy minister said as he prepared to host a meeting of Opec producers later this week.
Prices rebounded Monday after tumbling 3.7 per cent on Friday as Saudi Arabia signaled that the Algiers meeting will be consultative and unlikely to reach a firm decision. While Noureddine Boutarfa’s comments don’t change that, they suggest Opec’s leading member may still be willing to work toward the group’s first production curbs since the organisation let members produce at will in late 2014, causing prices to plunge. Opec meets again in Vienna in November.
The oil market is in a “much more critical” state than when Opec last met three months ago, Mr Boutarfa said Sunday in an interview. Aside from the Saudis, producers have made additional proposals, he said later at a news conference, without giving details.
“Saudi Arabia is ready to freeze production at the January level,” Mr Boutarfa said, calling the offer “an interesting step.” Saudi Arabia pumped a record 10.69 million barrels a day in August compared with 10.2 million in January, data compiled by Bloomberg show. Algeria wants the group to cut its collective output by 1 million barrels a day, Mr Boutarfa said.
More than 800,000 barrels a day of additional crude is entering the global market this month compared with August as Russia pumps at an all-time high and Libya and Nigeria restore disrupted supplies, according to statements from their ministry officials in those nations. The surplus will last for longer than previously thought, persisting into late 2017 as demand growth slumps and supply proves resilient, the International Energy Agency said. Tumbling crude has put financial pressure on Opec members from Saudi Arabia to Gabon. “The situation since the last meeting in June has worsened,” said Mr Boutarfa, who’s been involved in talks with Saudi Arabia and other members in the run-up to the meeting. “So it’s important to see what measures can be adopted in the short term and very short term to find a solution to this situation that isn’t helping any Opec country.”
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