Saudi Arabia won't unilaterally cut oil production as it and fellow OPEC members discuss how to cope with a possible increase in global crude output, according to people familiar with the matter.
Saudi Arabia
won't
unilaterally cut oil production as it and fellow OPEC members discuss how to
cope with a possible increase in global crude output, according to people
familiar with the matter.
Earlier this month, the Organization of the Petroleum Exporting Countries, a
group of some of the world's largest oil producers, said it would keep its
output ceiling unchanged. But OPEC officials have been publicly and privately
jostling over whether the group might have to throttle back--should global oil
output rise significantly and threaten to weaken prices--and how to divvy up
any cuts among members.
For the past two years,
Saudi Arabia
has
essentially promised to steady markets no matter what fractious OPEC delegates
decide. Saudi ministers walked out of an OPEC meeting in 2011 after members
failed to agree to raise the group's collective output to help make up for lost
global output owing to civil war in Libya. As recently as last month, Saudi
officials had said
Riyadh
was
willing to act alone to steady markets, whether other OPEC members agreed or
not.
But now, with pressure growing over a possible output cut to steady markets,
Saudi is signaling it is no longer willing to go it alone.
"
Saudi Arabia
is
done with its role as swing producer," said one official familiar with
matter. "It is not
Saudi Arabia
's
role anymore to adjust output to protect the market or balance (it.) It is the
(responsibility of) OPEC."
And on Thursday, at least one other OPEC member acknowledged that new stance. Suhail
Mohammed Al Mazrouei, energy minister for the
United
Arab Emirates
, told reporters that OPEC
would act "collectively." OPEC members "cannot do something
unilaterally," he said.
Saudi Arabia
is
the OPEC member with the most so-called spare capacity-the ability to ramp up
or idle production quickly to accommodate market demand. For years,
Saudi
Arabia
's has been a steadying voice
in the oil market, constantly reassuring consumers that it will produce enough
oil to meet demand amid a series of supply disruptions.
More recently, however, OPEC has faced a very different issue:
U.S.
crude
oil output is surging, and a number of OPEC members are also poised to ramp up
production.
Iraq
, long
sidelined by Saddam-era sanctions and post-invasion setbacks, is now producing
more than it has on an annual basis in at least 20 years.
Iran
,
subject to tough sanctions that have dried up its market share, has made
diplomatic progress with the West. That has raised hopes in
Tehran
that
it will soon be able to sell more of its crude.
And in
Libya
,
officials have said they are closing in on a deal with striking workers who
have shut down terminals, essentially strangling exports from that North
African oil heavyweight.
All that has come at a time when OPEC says demand for its oil has receded in
the short term.
Long-term demand forecasts for OPEC crude remain buoyant, the group and other
analysts say.
OPEC has recently trimmed output to just below its agreed ceiling of 30 million
barrels a day, but has so far held off on officially lowering that ceiling.
Saudi
Arabia
, meanwhile, has already
unilaterally lowered its production to 9.6 million barrels a day in November,
from 10.1 million barrels a day in August, according to OPEC figures.
One
Persian Gulf
oil official said the Saudis "are fighting
the pressure that could come on them" to further reduce production on
their own. "They don't want to carry the burden alone," this official
said.
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