Saudi Arabia 'revisiting' policy on oil output cuts, Government says


Oil prices fell on Wednesday on worries that global supply is climbing after US inventories rose unexpectedly and Saudi Arabia and other big producers signalled that they may increase output.

OPEC is in its second year of an effort to erase a surplus in global crude oil inventories through coordinated production cuts.

EIA reports a 2.1 million increase in crude oil inventories. The sharp rise in the USA dollar against the euro, emerging market currencies and industrial commodities also suggests a deflationary chill whose ominous implications must be missed by the Powell FOMC as it positions for the seventh rate rise since December 2015.

Petrochemical giant Saudi Aramco has increased the crude oil prices for Asian consumers to the highest in four years, looking at the strong demand and that seems to be adding premium to those prices.

The request, described by Bloomberg as "rare", coincides with a rise in crude oil prices, which reached more than $80 a barrel in May for the first time since November 2014. "We always have conversations with the U.S. about the stability of the oil market".

WTI settles at $64.73/bbl, down 79 cents, or 1.21%, on the day.

Brent crude oil futures were up 5 cents, to $75.34/Bbl by 2:23 p.m. ET, climbing back from a session low of $73.81/Bbl.

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The price of oil has been under pressure given the potential for a trade war escalating over Washington's pursuit of tariffs.

Customers waiting for cargoes include U.S. Chevron Corp, India's Nayara Energy and China National Petroleum Corporation (CNPC).

Opec and Russian Federation meet on 22 June to discuss production policy.

Following the drop in oil price to an all-time low, OPEC and other major producers including Russian Federation started to withhold 1.8 million barrels per day output in 2017 to rein in oversupply that had depressed prices since 2014.

Outside OPEC, however, there were ongoing signs of rising output. Its output has been hampered by inadequate investment, mismanagement and US sanctions.

Iran and Venezuela are now the two key oil supply concerns globally that supported the oil price rally in recent weeks, before Saudi Arabia and Russian Federation hinted at discussions that they were considering reversing some of the cuts to offset production losses and "ease market and consumer anxiety".