US Hurricanes Affecting Oil Prices, Saudi Could Cut Output

Jerome Frank
September 13, 2017

Stretching the duration of OPEC production limits by three months or more would fall under a worst-case scenario that ministers are now contemplating, the people said, asking not to be named because the talks were private.

In May this year, OPEC producers and 11 participating non-OPEC countries including Russian Federation formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day for an extension.

In parallel, the Saudi government said that the UAE had cut its crude oil allocations for September and October by 10%, whereas Kazhakstan said it had the ability to curtail output despite the ramp-up of production at its new Kashagan field.

OPEC's secretary-general Mohammad Barkindo said on Monday the supply cut deal was expected to help the global oil market rebalance and strong demand could further reduce oil inventories.

Vanguard survey of crude oil markets showed that the price of Brent which is usually used to benchmark the prices of other crudes stood at $54.30 per barrel yesterday.

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The new deal may include OPEC members Libya and Nigeria, which are exempt from the current agreement.

Hurricane Irma knocked out power to almost 5.8 million Florida homes and businesses on Sunday after millions were told to evacuate ahead of the storm. A separate report showed that USA oil production dropped sharply to 8.78 million barrels per day due to hurricane effect. Recent Hurricane Harvey that battered Gulf Coast and led to refinery outage in tune of 4.2 million barrels per day, has pushed the landlocked WTI price lower.

Data from industry group the American Petroleum Institute (API) was due later on Tuesday while the U.S. Department of Energy's Energy Information Administration (EIA) will release its numbers on Wednesday (9/13).

The kingdom and Kazakhstan said such an extension "would be considered in due course as market fundamentals may dictate", according to a separate Saudi statement.

The OPEC of which Saudi Arabia is the leader, and other producers including Russian Federation, have agreed to trim their output by almost 1.8 million bpd until next March. It also said demand will be higher than it previously thought.

Other reports by Guamnewswatch

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