LONDON (AFP) – Saudi Arabia is the sole member of OPEC to have fulfilled a commitment by the cartel to cut oil production in November, the Center for Global Energy Studies said in its monthly report.
Ministers from the Organization of Petroleum Exporting Countries, meeting in the Qatari capital Doha on October 20, approved a reduction in the group’s output ceilings by 1.2 million barrels a day in order to stem a fall in crude prices.
But according to the CGES: “The only real sign of reduced output has come from Saudi Arabia, which has continued with its market-led policy of allowing production of its heavier grades to slip in response to weaker demand from customers.”
It warned that while the kingdom was likely to continue to balance the oil market “the time will come when Saudi Arabia is no longer able, or willing, to act alone to shore up prices.
“At that point other OPEC members will be required to act their parts, but experience suggests they might be reluctant to do so …”
The CGES estimated that the 11 members of OPEC, including Iraq, will turn out 29.6 million barrels a day in the fourth quarter, down by only 200,000 barrels a day from the third quarter.
The energy consultancy suggested that OPEC members perhaps required a sharp fall in prices to spur them into taking action.
“OPEC’s members other than Saudi Arabia seem to need another downward price shock before they are prepared to act, rather than just talk, in defence of their revenues,” the report said.
CGES reminded readers of its report that Saudi Arabia, the most influential member of OPEC, was able in extremis to force its fellow exporters to cut their output.
“In Jakarta in 1997, having failed to dissuade other members from their rampant over-production, Saudi Arabia initiated a quota increase in the face of falling demand,” CGES said.
The effect was to force prices down to 10 dollars per barrel and “instil a renewed sense of purpose in OPEC”.
On Monday, New York’s main contract, light sweet crude for delivery in January, was about 58 dollars per barrel.