The Saudi minister stressed in Houston, Texas that freezing production is the beginning of the fall in inventories.
The producing nations will not cut energy supply. File photo: Reuters
The Saudi Oil Minister Ali Al-Naimi, expressed confidence that more countries will support, in talks scheduled for March, an agreement to freeze production at existing levels, but ruled out a cut in crude production of large producers in the short term.
in his speech at a conference in Houston IHS CERAWeek Naimi told executives energy companies growing support for freezing and stronger demand should ease over time, excessive global supply that has led oil prices to their lowest level in more than a decade.
“a freeze is the beginning of a process. If we could get all the major producers agreed not to add additional barriers, then, this high inventory we have today is likely to decrease in due time, “Naimi, perhaps the world’s most powerful oil official said.
Distrust
the official emphasized that markets should not see this emerging agreement as a prelude to production cuts, saying there was not enough confidence to reach such agreement.
“that will not happen because many countries are not going to accept it,” Naimi said during a question and answer session after his speech, in which he reaffirmed the rationale behind the decision of Saudi Arabia to maintain production against plummeting prices.
“Even though they say they will cut production, they will not. No sense wasting our time looking for production cuts. These will not occur, “he said.
Traders have been skeptical that a freeze on production near record levels can do much to support the market. Oil prices fell nearly 4% after Naimi’s comments
After an unexpected meeting, Saudi Arabia, Russia, Venezuela and Qatar agreed last week to freeze production levels in January.; Naimi said the move is likely to receive support from more countries.
“We expect another meeting sometime in March and probably achieve more agreements on freezing” the minister said.
the senior oil official did not specifically refer to Iran, the main obstacle to a global deal is concrete having opted to increase production after removal of international sanctions.
While the speech marks his public comments largest in months, Naimi offered little information about the condition of the oil markets and the evolution of policy making in Saudi Arabia, the world’s largest exporter.
Instead, he sought to make peace with an industry that has struggled to accept decision to Riyadh and OPEC late 2014, about not cut production to bolster prices, as had been done for decades. Oil prices have fallen 70% since mid-2014 to the oversupply.
“We have not declared war on shale or any other country or enterprise, contrary to all the rumors,” said Naimi .
Venezuela has talked to Russia, Saudi Arabia and Qatar to plan a meeting in mid-March with OPEC and producers outside the group have been shown likely to adhere to the agreement this month to freeze pumping oil minister of the South American country said on Tuesday.
“We expect more than 10 major OPEC and non-OPEC producers worldwide that would gather to bow to this proposal,” Eulogio del Pino told Reuters adding that they are still deciding the date and place of the meeting.
Saudi Arabia, Russia, Qatar and Venezuela agreed last week to freeze production in January levels if other countries join the pact.
oil falls again after denial about cuts
oil prices fell on Tuesday more than 4% after the oil minister of Saudi Arabia, Ali al- Naimi ruled out any production cut, reiterating the position of his country to keep pumping, despite the oversupply that has collapsed prices in the last 20 months.
investors remain skeptical . the possibility of freezing rebalance the market
“Saudi Arabia will continue to produce,” said Tariq Zahir, of Tyche Capital Advisors in New York, adding: “there is a level of confidence to implement cuts. “
Even if there was a freeze on production, reduction would not be sufficient to generate impact. “If they freeze production volumes in January, are already oversupplied by more than 1 million barrels per day: this only prolongs the oversupply,” said Dominic Haywood, Energy Aspects
. market considered unlikely that Iran access to limit their production, now that it is free of the sanctions that prevented export.
the Iranian oil minister described as “ridiculous” the suggestion by some producers to freeze . production in January levels
benchmark Brent futures fell $ 1.42, or 4%, to $ 33.27 a barrel; while US crude futures fell $ 1.52, or 4.6%, to $ 31.87 a barrel.
The Mexican crude oil fell to $ 24.96 per barrel, which means a loss of 5.2 percent.
the secretary general of OPEC said on Monday that if successful, a freeze on production could be followed by other steps, but said that the group itself could no longer be solely responsible for reducing the overall pumping. (Reuters)
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