Oil prices climb after Saudi Arabia announces production cut

Oman oil minister says majority of OPEC and its allies support cut

Saudi Energy Minister Khalid al-Falih said last month the kingdom would pump 11 million bpd in November, up from 10.7 million bpd in October.

The U.S. has meanwhile allowed some of its allies - Greece, India, Italy, Japan, South Korea, Taiwan and Turkey - as well as rival China to continue to purchase Iranian oil despite re-imposed sanctions, as long as they work to reduce their imports to zero.

But Russia appears to need more convincing that it should be cutting production again.

Meanwhile, analysts believe OPEC, led by Saudi Arabia, of course, "is acting responsibly by reducing its production that it had earlier brought online to offset possible Iranian losses".

Any official decision on global output cuts will be made at a key ministerial meeting for OPEC and non-OPEC producers in Vienna in early December, Falih said.

Declines extended after the USA said on Monday it would allow eight countries to continue buying sanctioned Iranian crude, the Wall Street Journal reported. Brent crude dropped below $70 a barrel on Friday for the first time since April, while the New York's West Texas Intermediate sank below $60 a barrel, a nine-month low.

Global oil prices tumbled into a bear market last week, down more than 20% from their recent peak.

Stephen Innes, head of Asia Pacific trading at Oanda, said: "The recent rebound in oil prices is a reminder that it will become increasingly hard for twin deficit currencies - rupee, rupiah and peso - to smooth currency volatility via rate hikes without hurting the economy, and through interventions without depleting reserves".

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The UAE's energy minister, Suhail al-Mazrouei, said balancing the market would "require changes in the strategy" of producers.

Global oil producers - including OPEC and Russian Federation - pump out roughly 100 million barrels of oil per day, so a 1% cut in production might not seem like a big deal.

Falih said they would then decide whether to adjust production and by how much.

It was "premature to talk about a specific action", he told reporters, asked about the possibility of an output cut to support sliding prices.

Output from the world's top oil producers Russian Federation, the United States and Saudi Arabia has risen by 1.05 million bpd in the last three months, based on official output figures. So, we know that supply is going to be reduced and in the medium term we can expect higher oil prices. He said the committee were reviewing the market and would draw up a plan to deal with the prospect of higher supply in 2019.

"We want to enter 2019 with a minimum amount of stocks", Falih said.

He also attributed the sharp drop in prices to "microeconomic uncertainties" and signs of a build-up in crude inventories.

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