Saudi Oil Minister, Ali Al-Naimi, has ruled out imminent OPEC production cuts, although he said on Tuesday he was confident more nations would join a pact to freeze output.
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ENERGY: Benchmark U.S. crude futures skidded 69 cents, or 2.2 percent, to $31.18 a barrel in electronic trading on the New York Mercantile Exchange.
“This is more like a joke that they tell us they would freeze their production above 10 million barrels per day and that we should also in turn freeze our production at one million”, Bijan Zangeneh, Iranian oil minister, said on Tuesday.
Oil prices fell further in Asia today after OPEC kingpin Saudi Arabia shut the door on an output cut to ease the global crude supply glut, touting only a freeze in production.
Meanwhile, Iran made clear it has no interest in restraining its production after global sanctions against it were lifted in January, calling a joint Russian/Saudi proposal for major exporters to freeze output “laughable”.
Volatile crude oil is once again taking the stock market on a ridiculous roller coaster ride.
Prices rose the previous day as traders looked past an increase in USA commercial crude inventories to a record high to a fall in stocks of refined products like gasoline. That momentum continued into Wednesday, with Brent falling 2 percent at the start of trading in NY to $32.60 per barrel.
He said the country can “coexist” with other producers but also said that “inefficient and uneconomic producers will have to get out”.
Mr al Naimi said: “The producers of these high-cost barrels must find a way to lower their costs, borrow cash or liquidate”.
Analysts quickly viewed OPEC’s announcement with skepticism, arguing that increasing production from OPEC members Iraq and Iran, as well as the stubborn production coming out of United States shale-oil companies, would keep the market oversupplied.
Aw said Venezuela had been working hard to seal an agreement with fellow OPEC producers to trim their output, with the South American country’s economy having been badly hurt by sliding prices.
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The US Energy Information Administration will report official inventory data later on Wednesday.
