Kuwait Joins Saudi View of No Immediate OPEC Supply CutsAlaric Nightingale and Mark Shenk
Two of OPEC’s biggest members say they won’t immediately reduce oil production to offset tumbling prices, a signal the group is unlikely to heed Venezuelan calls for an emergency meeting.
While producing nations would like higher prices, there’s “no room” for them to achieve that by lowering supply, Kuwait’s oil minister told the official Kuwait News Agency yesterday. Saudi Arabia, which pumped almost one-third of the group’s output last month, won’t alter its supplies much between now and the end of the year, a person familiar with its policy said Oct. 3.
“Saudi action is what matters most and we have yet to see anything,” Katherine Spector, a commodities strategist at CIBC World Markets Inc. in New York, said yesterday by phone. “There’s not a lot the Venezuelans can do, either by action or rhetoric, that will change things.”
OPEC’s largest Persian Gulf producers, including Saudi Arabia, Iraq and Iran, are offering the biggest discounts to buyers in Asia since at least 2009 to maintain market share amid a global glut that has sent oil into a bear market. Venezuelan President Nicolas Maduro gave instructions to ask for an extraordinary meeting, the country’s foreign ministry said in a post on its Twitter account on Oct. 10.
Ample supply, helped by surging U.S. and Russian output, pushed Brent crude, the benchmark for more than half the world’s oil, down more than 20 percent from its peak for the year on June 19, meeting a common definition of a bear market. Brent slipped as much as 2.1 percent to $87.03 a barrel today, the lowest intraday price since Dec. 1, 2010.
The OPEC crude basket, made up of the group’s main export grades, fell to $85.93 yesterday, near a four-year low.
The Organization of Petroleum Exporting Countries boosted production in September, pumping 30.47 million barrels a day, the most since August 2013, it said Oct. 10 in its latest monthly Oil Market Report. Saudi Arabia told OPEC it increased output 107,000 barrels to 9.704 million. The group’s next meeting is scheduled for Nov. 27 in Vienna.
“If we had a way to preserve the stability of prices or something that would bring it back to previous levels, we would not hesitate in that,” Kuwait’s Oil Minister Ali Al-Omair said in remarks reported by KUNA. “There is no room for countries to reduce their production,” he said, without giving details.
Kuwait hasn’t received an invitation to hold an emergency meeting to consider cutting output, he told KUNA.
Youcef Yousfi, Algeria’s energy minister, said Oct. 12 they are ‘tranquil’’ about prices and hadn’t received any invitation to attend an emergency meeting.
“Saudi Arabia doesn’t want to lose market share in Asia,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said by phone yesterday. “They are increasingly giving signs they won’t do it on their own.”
Crude probably won’t fall below $76 to $77 a barrel because that price level represents the highest cost of production in the U.S. and Russia, Al-Omair of Kuwait said. Both countries have abundant supply and are outside the group.
Russia is concerned about volatility in oil prices and will continue regular consultations with OPEC on ways to steady markets, Deputy Energy Minister Yury Sentyurin told reporters in Abu Dhabi Oct. 12.
The Saudi government may start to face more internal pressure to support oil prices. Saudi billionaire Prince Alwaleed bin Talal Al Saud sent a letter in Arabic dated yesterday to oil minister Ali al-Naimi, saying the kingdom needed to start to worry about the decline in prices.
“There’s not a sense of urgency yet, at least from the actors that matter,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by phone. “The Saudis could take action immediately if they choose to.”