© Reuters/Kevin Lamarque
Crown Prince Mohammed bin Salman • President Donald Trump
Crown Prince Mohammed bin Salman • President Donald Trump
DHAHRAN, Saudi Arabia (Reuters) - Saudi Arabia raised oil production to
an all-time high in November, an industry source said on Monday, as U.S.
President Donald Trump piled pressure on the kingdom to refrain from
production cuts at an OPEC meeting next week.
The meeting, at which OPEC members will consider how to arrest a
decline in oil prices, comes days after leaders of top global oil
producers - Russian President Vladimir Putin, Saudi Crown Prince
Mohammed bin Salman and Trump - travel to Argentina for a G20 summit
this week.
Saudi Arabia agreed to raise supply steeply in June,
in response to calls from consumers, including the United States and
India, to help cool oil prices and address a supply shortage after
Washington imposed sanctions on Iran.
But the move backfired on
Riyadh after Washington imposed softer than expected sanctions on
Tehran. That triggered worries of a supply glut and prices collapsed to
below $60 per barrel on Friday from as high as $85 per barrel in
October.
The industry source, who is familiar with the matter,
said Saudi crude oil production hit 11.1-11.3 million barrels per day
(bpd) in November, although it will not be clear what the exact average
November output is until the month is over.
Those
levels are up around 0.5 million bpd - equal to 0.5 percent of global
demand - from October and more than 1 million bpd higher than in early
2018, when Riyadh was curtailing production together with other OPEC
members.
Non-OPEC Russia, which teamed up with Saudi Arabia in
the first OPEC joint production cuts since 2016, has also raised
production steeply in recent months to a post-Soviet high of 11.4
million bpd.
Analysts at Goldman Sachs, one of the most active
banks in commodities, said the G20 meeting could be a catalyst for
prices to rebound.
“We expect an OPEC cut and its announcement to lead to a recovery in (Brent) prices,” the bank said in a note.
KHASHOGGI FACTOR
Saudi
oil industry sources have signaled they wanted prices to stay above $70
per barrel and Saudi energy minister Khalid al Falih said this month
global oil supply could exceed demand by over 1 million bpd next year,
requiring OPEC to take action.
Falih said earlier this month that
state oil giant Saudi Aramco would ship 0.5 million bpd less crude in
December than in November as demand from customers was lower.
Possibly
complicating Saudi decisions on oil output is the crisis around the
killing of journalist Jamal Khashoggi at Riyadh’s consulate in Istanbul
last month.
Trump stood behind Saudi Crown Prince Mohammed bin
Salman despite calls from many U.S. politicians to impose stiff
sanctions on Riyadh. Prince Mohammed is the ultimate Saudi oil policy
maker and Saudi watchers have said the Prince will try to avoid
confrontation with Washington, including on oil prices.
The
United States is not a member of OPEC and is not participating in the
output reduction. Trump has repeatedly called on OPEC to refrain from
cuts and has raised pressure on the group in the last few days.
On Sunday, Trump thanked himself for lower oil prices and compared it to a big tax cut for the U.S. economy.
Shares dip as Trump dampens hopes of trade breakthrough
“So great that oil prices are falling (thank you President T),” Trump tweeted, referring to himself.
Last week, Trump tweeted: “Oil prices are getting lower... Thank you Saudi Arabia but let’s go lower”.
Reporting by Rania El Gamal; Writing by Dmitry Zhdannikov; Editing by Dale Hudson and Kirsten Donovan
Our Standards:The Thomson Reuters Trust Principles.
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