EMEA News
Saudi "Not Prepared" to Cut Oil Output
Saudi Arabia on Thursday added fuel to the fire of analysts critical of the Saudi/Russian pact to freeze oil output by stating that it is "not prepared" to cut oil production.
The statement was issued by Adel Al Jubeir, foreign minister for Saudi Arabia, who told Agence France-Presse that "If other producers want to limit or agree to a freeze in terms of additional production that may have an impact on the market, but Saudi Arabia is not prepared to cut production."
Saudi Arabia, Russia, Venezuela, and Qatar on Tuesday agreed to freeze their output at January levels in a bid to stop the global oil price slide, but only if other oil-producing countries follow suit.
Al Jubeir's remarks corroborated suspicions of critics such as Dennis Gartman, founder and publisher of `The Gartman Letter,' who earlier this week suggested that even if a production cut rather than a freeze had been announced it shouldn't be taken seriously, and David Hufton, analyst for PVM, who stated that "The market needs a cut, not a production freeze."
Analysts have also pointed out that tensions between Riyadh and Tehran would make it unlikely that Organization of the Petroleum Exporting Countries (OPEC) members would cooperate with any proposed bid to correct the market.
Still, Saudi's unwillingness to play ball had minimal effect on a three-day rally that is driven largely on the strength of rumour that this week's events may be the beginning of a concentrated effort by OPEC to improve the market imbalance.
Light, sweet crude futures for delivery in March finished with an 11 cent gain at $30.77 per barrel on the New York Mercantile Exchange; Brent crude fell only 0.6 percent on London's ICE Futures exchange to $34.28 per barrel.
Earlier this week, Phillip Futures said even if the Saudi/Russian pact had agreed to production cuts it would do little good, because they "would only give more expensive forms of production more room to breathe and would only solve the problem in the short term."
