Saudi Adamant Over Prices as Crude Demand Returns to OPEC

Saudi Adamant Over Prices as Crude Demand Returns to OPEC

Sources told Reuters that Saudi Arabia sees no need to hold a summit for oil producing countries’ over oil prices if such discussions would fail to produce any concrete resolution of the outlying issue.

The comments emerged following a Gulf Arab oil ministers meeting in Qatar where a Venezuelan proposal for an OPEC and non-OPEC summit was discussed.

Riyadh believes it is best not to interfere in the market at present, the sources told Reuters on condition of anonymity, adding that “If we are meeting for the sake of meeting, it would backfire”.

In related news the International Energy Agency said that non-OPEC production would fall by 500,000 b/d to 57.7 m in 2016, according to Bloomberg.

Saudi Arabia’s strategy to defend OPEC market share through a price war “appears to be having the intended effect,” the IEA said in a monthly report.

“The lower price environment is forcing the market to behave as it should by shutting in output and coaxing demand”, it said, adding that US shale output will shrink by almost 400,000 b/d next year.

Consequently the amount of crude needed from OPEC next year will increase by 1.6 m b/d to 31.3 m, the report explained.

Nonetheless, the non-OPEC decline is not taking place fast enough to have a noticeable effect on oil prices in the here and now, with Goldman Sachs predicting that prices could drop as low as $20.

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