Wednesday , September 22 2021

OPEC plans to cut oil production – fearing overproduction in 2019

"It is agreed that there will be too much oil in the market in 2019," Oman Oil Minister Mohammed bin Hamad al-Rummy addressed the Wall Street Journal after the ministerial meeting of the OPEC Committee to oversee the oil market. The meeting was held at Abu Dhabi on Sunday.

Oman is not a member of the OPEC, but is part of the organization's decisions on product regulation.

The planned reductions are made by the 15 OPEC countries, which are mostly Middle Eastern oil countries, in order to prevent a dramatic drop in prices.

Saudi Arabia and some other oil-exporting countries met in Abu Dhaba this weekend. One discussed the reduction of oil production by 1 million barrels. The decision will be taken at the OPEC Ministerial Meeting in Vienna on 6 December. Saudi Arabia should be prepared to take half of this reduction; 500,000 barrels.

Russian doubts

Russian oil minister Alexander Novak told CNBC on Sunday that no urgent decisions should be made.

"The market is volatile and surprising decisions about reducing production can make the impact bigger," he said.

He did not rule out that Russia, which is not a member of OPEC, could participate in the reduction of production in December.

Said Arab Oil Minister Khalid al-Falih said it is too early to say what will happen at the end of the ministerial meeting in December, but that OPEC will not be frustrated with the necessary reduction.

At the geopolitical level, US sanctions against Iran are causing problems in the oil market. In addition, a significant increase in oil production in the United States.

Dramatic decline in North Sea oil

In the middle of October, North Sea oil barrels traded in the immediate market at around $ 85, while Friday fell below $ 70, but ended at $ 70.94. This means that prices have fallen by 20 percent less than a month.

It can be compared to stock prices in petroleum related companies. Equinor (formerly Statoil) has fallen by 7.4 percent, Aker BP, whose dominant owner Kjell Inge Røkke has dropped by 21.9 percent. According to Finansavisen, this means that Aker BP has become 30 billion kroons per paper month, which is less worth it.

The newspaper, in its Saturday edition, called last month's stock exchange on tobacco-related stocks.

According to Finansavisen, companies providing services to oil companies also noted a drop in oil prices. For example, the seismic company Petroleum Geo Services has decreased by 34.1 percent. One-third of the value is lost.

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