Oil prices skid amid global stock market slump, swelling United States supply

Irving Hamilton
December 6, 2018

When President Trump announced his decision to pull the US out of the Iran Nuclear Deal and reimpose sanctions on the Islamic Republic, many oil producers ramped-up production over fears of the effects the sanctions would have on trading.

Saudi Arabia, OPEC's de facto leader, has pressed for steep output reductions but has faced pressure from Trump to keep oil flows steady to keep prices low, rather than reduce inventory.

Saudi Arabia's Energy Minister Khalid al-Falih met with the U.S. Special Representative for Iran, Brian Hook, on Wednesday, a day before OPEC is meeting to discuss new production cuts to rebalance the market, Reuters reported, quoting sources familiar with the meeting.

The slide in United States oil followed a tumble in global stock markets on Tuesday and Wednesday, with investors anxious about the threat of a widespread economic slowdown.

Iranian oil minister has lashed out at USA special representative for Iran Brian Hook over his "meddlesome" meetings with members of the Organization of Petroleum Exporting Countries in Vienna, asserting that OPEC is an independent body that does not take orders from the US.

Traders said oil prices were being weighed down by weak global financial markets, which saw stock markets tumble on Thursday.

"I'm cautiously optimistic that a deal gets done, but the devil will be in the detail", said Mohammad Darwazah, a director at Medley Global Advisers.

OPEC and its non-cartel partners together account for around half of global output

Riyadh wants Moscow to contribute at least 250,000-300,000 bpd to the cut but Russian Federation insists the amount should be only half of that, OPEC and non-OPEC sources said.

Russia's second-largest oil producer, Lukoil PJSC, is ready to comply with any request from the Kremlin but hopes output cuts won't be necessary, said Chief Executive Officer Vagit Alekperov.

Iran is now subject to US sanctions and as such won't participate in any curbs, the country's OPEC governor Hossein Kazempour Ardebili said this week.

Major producers such as Russia, Saudi Arabia, Iraq, the UAE and Kuwait pounced on the occasion to produce as much oil as they could, anticipating a steep drop in Iran's exports which did not happen.

Official US government oil production and inventory data is due later on Wednesday.

Resolving the group's internal differences and convincing a skeptical oil market that they're serious about preventing a new supply glut in 2019 would require ministers to conclude weeks of debate and settle on a final figure.

"We have taken over 1 million bpd off Iran's export list and many more barrels will be coming off very soon", the diplomat said at a briefing.

Canada arrests Huawei CFO in Vancouver for extradition to the U.S.
The chief financial officer of China-based global tech giant Huawei Technologies was arrested in Vancouver this week. He declined to say more about the case, citing a publication ban requested by Ms Meng and ordered by the courts.

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER