Oil production cuts may be necessary: Abu Dhabi summit - Economy

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Officials of Saudi Arabia, Russia and other major exporters met on Sunday after U.S. sanctions on Iran's oil exports took effect.

"Many of us share this view", said Oman Oil Minister Mohammed bin Hamad al-Rumhi on Sunday in Abu Dhabi at an oil market monitoring committee meeting.

The oil producers have chose to act after oil dropped as much as 20 percent in one month, after hitting a four-year high in early October.

But the USA is continuing to pump out high volumes of crude.

However, at the global level, it will be a new blow to consumers, who will have to pay more for gasoline, and will increase transport expenses of the companies.

Nigel Rendell, a London-based senior analyst at Medley Global Advisors: "It creates a double whammy for many EM policy makers - even more of a weaker local currency is now required to buy what has become a higher dollar oil price". The U.S. standard, West Texas intermediate crude, was $60.19, down 21 percent in the same period.

OPEC members may be weighing oil production cuts again, anxious that a slowing global economy will undermine prices, but in the group's Middle East heartland producers are spending billions to add output capacity for the long term.

Meanwhile, WTI has traded at a discount of $8 to $10 per barrel relative to the worldwide Brent crude benchmark recently.

Oil prices, which rose above $85 a barrel in October, fell to less than $70 a barrel last week amid a supply glut.

They call it "production adjustments", but in reality most major oil extracting countries agreed Sunday new strategies regarding crude output were needed in light of the surplus accrued over the past few months. According to Oilprice.com, USA shale production saw an increase of 400,000 bpd in the first week of November, pushing output up to 11.6 million barrels per day.

Before the United States re-imposed sanctions on Iran, "fear and anxiety gripped the market", al-Falih said at the Abu Dhabi International Petroleum Exhibition & Conference.

Meanwhile, analysts believe OPEC, led by Saudi Arabia, of course, "is acting responsibly by reducing its production that it had earlier brought online to offset possible Iranian losses".

Commerzbank, Germany's second-largest lender, said on Friday that oil producers must act to prevent prices tumbling.

Last week, the U.S. Energy Information Administration reported that U.S. oil production hit a new high during the week that ended on November 2.

Despite the sanctions against Iran, the supply of oil is ample as output from the world's top three producers - Russia, the United States and Saudi Arabia - is rising.

Russian Federation said in November it hit a 30-year high of 11.41 million bpd in October, an increase of about 440,000 from May. This is necessary because OPEC members like Nigeria need crude prices to remain high for obvious reasons, one of which being the fact that there are budgets to be financed. Those lower prices likely quieted Trump, but production cuts could again boost prices at the pump.