OPEC is considering exemptions for three nations from any potential oil-production cuts. Saudi Arabia’s oil minister told reporters that he didn’t know what OPEC should do at its next meeting but he didn’t anticipate a difficult meeting when the group meets on Nov. 27 to decide its response to slumping crude.
According to a source that did not want to be identified, Iraq, Iran and Libya wouldn’t have to reduce supplies should the Organization of Petroleum Exporting Countries agree to cut output at its gathering in Vienna. Ali Al-Naimi, Saudi Arabia’s oil minister, told reporters in the Austrian capital yesterday that it’s not the first time the oil market has been oversupplied.
Crude prices plunged into a bear market this year amid the highest U.S. oil production in more than three decades and speculation that Saudi Arabia wouldn’t cut output in response to a surplus. Oil-market analysts are perfectly divided on whether OPEC will cut output when it meets, or leave it unchanged.
“It makes sense that these three countries shouldn’t have to make further cuts” because they are already pumping less than they’re able to, Abhishek Deshpande, oil markets analyst at London-based Natixis, said by phone yesterday. Saudi Arabia would probably want assurances from Iran, Iraq and Libya that they won’t increase output, he said.
Crude drops
Brent crude futures slumped to a four-year low of $76.76 a barrel on Nov. 14. Futures fell 9 cents, or 0.1 percent, to $79.59 on the London-based ICE Futures Europe exchange at 11:47 a.m. Singapore time.
Discussions to spare Iran, Iraq and Libya, one of several proposals under discussion, reflect the fact the three countries are pumping below their potential, the two people said.
They pumped almost 7 million barrels a day between them last month, compared with total OPEC output of 31 million, according to estimates compiled by Bloomberg. Their combined 1970s peak was more than 10 million barrels a day.