Business | Oil & Gas
Saudis cut output more than expected
Saudi Arabia, the world's biggest oil exporter, cut production more than traders and analysts had estimated last month as crude prices plunged, figures from the oil minister show.
- Bloomberg
- Published: 23:41 December 11, 2008
Poznan: Saudi Arabia, the world's biggest oil exporter, cut production more than traders and analysts had estimated last month as crude prices plunged, figures from the oil minister show.
The kingdom pumped 8.493 million barrels of oil a day in November, Oil Minister Ali Al Nuaimi said yesterday in an interview in Poznan, Poland. That's 287,000 barrels a day less than estimated by the International Energy Agency, and close to the Saudi Opec quota of 8.477 million barrels.
Oil prices rallied as much as 5.5 per cent to $45.93 a barrel. "The Saudi Arabians might have been impatient with the market's scepticism, so they've decided some transparency is needed," said Mike Wittner, head of oil market research at Societe Generale SA in London. "It shows they're serious about cutting already and serious about cutting more."
Al Nuaimi said Saudi output was "absolutely" in line with its quota agreed by the Organisation of Petro-leum Exporting Countries, which is scheduled to meet on December 17 in Oran, Algeria. Last month he said $75 a barrel is a fair price for crude.
November data on Opec indicated the group was producing well in excess of quotas agreed at a meeting in October, where the organisation resolved to cut production by 1.5 million barrels a day to halt the plunge in prices. The 11 members subject to formal limits pumped 28.24 million barrels a day last month, according to Bloomberg estimates, compared with a ceiling of 27.3 million barrels a day.
"Everybody was looking to Saudi Arabia and saying they had to do something otherwise we would have even lower prices," said Ehsan Ul-Haq, head of research at Vienna-based JBC Energy GmbH.
Crude oil futures traded in New York rose as much as $2.41 a barrel. They traded at $45.84 at 10:50am London time.
Opec President Chakib Khelil along with officials from Libya, Qatar, Venez-uela and Iran have said the organisation will need to announce further cuts at next week's summit.
Saudi Aramco investment warning
Saudi Aramco, the world's biggest oil supplier, warned that falling oil prices will hurt investment in new fields, hampering the ability of producing nations to meet growing demand in future.
"We could see a new round of underinvestment, of overstretched capacities and high prices - repeating a vicious cycle, damaging the interests of both producers and consumers," the Saudi Press Agency cited Aramco's Vice President Khalid A. Al Falih as telling a conference in Dubai.
"Projects that require a high price environment are likely to be deferred or reexamined."
Business Editor's choice
-
Do unemployment figures flatter to deceive?
Jobseekers and recruiters give out mixed signals ranging from optimism to downright despair even as official data show recovery
-
Banks can increase their share
Longer opening hours, more locations outside cities and lower charges can help
-
Geepas idea blossomed in Dubai
The journey led from a small shop in Bahrain to a $1.27b company in the UAE
