Tue. Nov 29th, 2022

Saudi Arabia said on Monday that OPEC+ was sticking with oil output cuts and may take further measures to balance the market amid falling prices, denying a report that it was considering a production increase, according to state news agency SPA.

The Wall Street Journal reported earlier Monday that a 500,000-barrel-a-day output increase was being discussed for the next meeting of OPEC and its allies, known as OPEC+, on Dec. 4. The report quoted unidentified OPEC delegates.

“It is well known that OPEC+ does not discuss any decisions before the meeting,” Saudi Energy Minister Prince Abdulaziz bin Salman was quoted as saying by state news agency SPA, referring to the group’s next meeting in December.

Oil prices, which fell more than five percent to below $83 a barrel after the Wall Street Journal report, pared losses after the minister’s comments. Brent crude fell one percent to $86.70.

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Last month, OPEC+ unexpectedly decided to cut production targets sharply. It would be unusual for the group to increase output at a time of falling prices and growing concerns about the economic outlook.

Prince Abdulaziz was also quoted as saying that OPEC+ is ready to cut production further if necessary.

“The current cut of 2 million barrels per day by OPEC+ continues until the end of 2023 and if there is a need to take further measures by cutting production to balance supply and demand, we are always ready to intervene,” he said.

The WSJ said the story of the production increase came after US President Joe Biden’s administration told a federal judge that Saudi Crown Prince Mohammed bin Salman should have sovereign immunity from a US federal lawsuit related to the killing of Saudi journalist Jamal Khashoggi.

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The immunity decision was a concession to Prince Mohammed, strengthening his position as de facto ruler of the kingdom after months of efforts by the Biden administration to isolate him, the newspaper said.

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Physical crude oil markets have weakened in recent days, reflecting weaker demand from China and Europe.

(Reporting by Ann Maria Shibu in Bengaluru; Maha El Dahan and Alex Lawler Editing by David Goodman, Mike Harrison and Deepa Babington)