Leading OPEC producer Saudi Arabia has requested fellow members of the organisation to slash production in a bid to stem the current drop in prices.
This comes as oil indices continued trending down with Brent crude slipping below $70 a barrel and Western Texas Intermediate (WTI), as is usually the case, dipping even lower, at less than $60 per barrel of WTI.
With earlier groundwork already in place to limit supply come 2019, Saudi Arabia is aiming to export 500 000 barrels less by as early as December.
The step was taken, said Bloomberg, to “counter the price battering the finances of group members and energy companies alike”.
There was some disagreement over supply intervention when OPEC members met on Sunday, but the organisation has warned that “it might need new strategies, raising the prospect of a wider and coordinated cut in 2019,” Bloomberg reported.
The picture heralds a topsy turvy impression of the oil price a month or so ago, when the price edged upwards as supply chain uncertainties, particularly related to US sanctions against Iran, fuelled fears that it could affect the economies of India and China who are heavily reliant on Iranian oil.
At the time Saudi committed itself to keeping inventories stable through supplementing stock with an additional 1000 barrels a day.
Now they’re talking drastic cutbacks amid bear market conditions laying waste to margins.
“We are going to do everything we can to keep inventories and supply demand fundamentals within a reasonable narrow band around balance, and we believe markets will calm down,” Saudi energy minister Khalid Al-Falih said earlier today.
“We are not in the business of pinpointing a price going forward.”
