Saudis said to plan production cut
Report: No. 1 oil producer to shave 158,000 barrels per day from output beginning this week, with more reductions coming.
SAN FRANCISCO (Dow Jones) -- Saudi Arabia, which already has aggressively shaved its oil output in a battle to shore up prices, will reduce production by another 158,000 barrels per day beginning Thursday and more cuts are on the way, according to a media report.
The Saudi cut is seen as an aggressive move to keep the price of the U.S. benchmark crude above $55 a barrel, The Wall Street Journal reported Tuesday in its online edition, quoting Roger Diwan, an analyst at PFC Energy, a Washington industry consultancy.
The latest cut means Saudi Arabia will have reduced production by about 1 million barrels per day in the past six months, The Journal said, citing an unnamed senior Saudi oil official.
The reductions, part of a broader campaign by the Organization of Petroleum Exporting Countries, are intended to shrink inventories of oil that had ballooned last year as demand growth for petroleum faltered, The Journal reported. Saudi Arabia, the world' s largest oil exporter, is the oil cartel' s de facto leader and closely watched by markets.
Word of the Saudi move to further trim output comes as traders are trying to learn if OPEC is going to cut its production in line with its announced plans, the Journal said, noting OPEC' s members often produce more than they have pledged.
Saudi Arabia' s reduction is nearly double the total cuts it agreed to make under two output accords hammered out at OPEC at meetings in October and December, The Journal said. T he 10 OPEC members that committed to the cuts were producing about 27.5 million barrels a day in September, the Journal said, and if the agreed-upon cuts are fully implemented, output would drop to 25.8 million barrels a day in a global oil market of about 85 million barrels a day.
The U.S. benchmark crude closed $1.41 a barrel lower to $54.01 Monday on the New York Mercantile Exchange after the outgoing Saudi ambassador to the U.S., Prince Turki al Faisal, said current oil-price levels are " adequate to meet the requirements of producing and consuming countries," according to The Journal' s report. He also dismissed speculation that Saudi Arabia was trying to drive down oil prices to constrain export revenues for political rival Iran .