Gulf states unwilling to tighten oil production all alone, say analysts

By Omar Hasan ,AFP

KUWAIT CITY — Saudi-led Gulf OPEC members will reject pressure to shoulder the cost of cutting oil production alone despite warnings that prices risk sliding further, officials and analysts say. Saudi Arabia, Kuwait, the United Arab Emirates and Qatar, which pump more than half of OPEC’s 32 million barrels of daily output, want a solid commitment from all other producers, especially non-OPEC member Russia, to agree to production cuts across the board. “Gulf states will not undertake a unilateral output cut. They need strong cooperation from other producers, mainly Russia, to cut,” Kuwaiti oil analyst Kamel al-Harami told AFP. The Organization of the Petroleum Exporting Countries is to hold a crucial meeting on Dec. 4 to study prices, which have fallen around 60 percent since mid-2014. An informal meeting to be attended by some non-OPEC producers will be held the day before. “Gulf producers are not inclined to change their policy of defending market share rather than price despite heavy income losses,” Saudi economist Abdulwahab Abu-Dahesh said. “They realize they will be asked to bear the bulk of any cuts,” as none of the other OPEC members are financially in a position to do so and non-OPEC Russia has so far said it will not, Abu-Dahesh told AFP. A senior Gulf oil official said nothing has changed to alter Gulf states’ oil policy. “No indicators or changes have happened to convince Gulf states to change their policy and cut output,” the official told AFP, requesting anonymity. But another Gulf official hinted at some flexibility in case of cooperation. “It’s too early to say if OPEC would maintain its production policy,” said the official, who also wished to remain anonymous. OPEC heavyweight Saudi Arabia said last week it was ready to cooperate with other producers to stabilize the oil market and support prices.

The OPEC meeting comes at a time of a massive production glut, with oversupply continuing and inventories at almost record levels of more than 3 billion barrels, triple the normal rate. OPEC member Venezuela and some international economic reports have warned that the oil price could slide to the range of US$20-US$30 a barrel from around US$42 now if output is not trimmed. Abu-Dahesh said Gulf states are betting on developments indicating a balanced oil market next year after OPEC’s strategy knocked out some high-cost production, such as some U.S. shale oil.