Output Cuts

On November 10 - 11, 2018, Joint Ministerial Monitoring Committee (LMMC) was held at Abu Dhabi for OPEC and Technical Committee to discuss various scenarios of developing the oil market in the near future, including the possible excessive supply in 2019. The meeting was under mounting pressure to consider renewed production cuts after a slump in oil prices. Crude on both sides of the Atlantic tumbled Friday, November 9, 2018, as the U.S. reported rising stocks and Washington granted waivers that lessen the impact of sanctions on Iranian exports. Brent plunged below $70 a barrel for the first time in six months, shedding 4% last week. WTI futures also tumbled, losing around 5%. Later on Sunday night, it was reported that the meeting had come to the resolution that oil markets are well supplied and any decision regarding output cuts for 2019 will be taken at a crucial meeting in Vienna next month. “There will be fluctuations in oil prices and inventories,” Saudi Energy Minister Khalid Al Falih told reporters at the meeting. “We have not yet started discussions of cuts as yet. There is a possibility for cuts but we have to wait and see.” added Al Falih. He gave further comment saying said that they will not shy away from cutting if there is a need and oil market sentiment has clearly shifted to concerns about over supply. The comments from the oil ministers come as oil prices currently trade lower due to record oil production from the US as we as waivers granted to eight countries that import oil from Iran including China, India, Japan and Turkey among others. Meanwhile, the rumors are circulating over the possibility of UAE are planning to increase production capacity to 5 million barrel per day (bpd) by 2030. “The UAE as any other member state will adhere to whatever decision that will be taken. If we are asked to do anything we will do it, but let’s not jump to assumptions before we discuss,” the country's Energy Minister Suhail Al Mazrouei said ahead of the committee’s meeting in Abu Dhabi.