Saudi Arabia raised the production of oil in November to the highest level in the country’s history amid US President Donald Trump’s calls to lower oil prices.
An OPEC meeting, at which the members will consider how to arrest a decline in oil prices, will be held after the leaders of top global oil producers — Russian President Vladimir Putin, Saudi Crown Prince Mohammed bin Salman and Trump — travel to Argentina for a G20 summit this week. Saudi Arabia is expected to refrain from production cuts, an industry source told Reuters on Monday.
READ MORE: OPEC Weighs New Production Cuts as Oil Prices Hit 2018 Low
The source said that Saudi crude oil production hit 11.1-11.3 million barrels per day (BPD) in November, although the exact average daily output will be clear only after the month ends.
The levels to which Saudi Arabia has increased production are 0.5 million BPD — equal to 0.5 percent of global demand — from October and more than one million BPD higher than in early 2018, when OPEC members were curtailing production. OPEC and Russia agreed to cut production for the first time since 2016, although Russia has raised production steeply in recent months to a post-Soviet high of 11.4 million BPD.
Analysts at Goldman Sachs, one of the most active banks in commodities, said the G20 meeting could be a catalyst for prices to rebound, noting that they ‘expect an OPEC cut and its announcement to lead to a recovery in [Brent] prices’.
Saudi oil industry sources have indicated they want prices to stay above $70 per barrel, and Saudi energy minister Khalid al Falih said this month that global oil supply could exceed demand by over one million BPD next year, asking OPEC to intervene, Reuters reported. Falih also noted that state oil giant Saudi Aramco would ship 0.5 million BPD less crude in December than in November following falling demand from customers.
The US, which is not an OPEC member state and has not participated in the output reductions, has repeatedly called on OPEC to refrain from cuts. Trump, who has maintained his support for Saudi Crown Prince Mohammed bin Salman despite calls from many US politicians to impose sanctions on Riyadh over the killing of Washington Post columnist Jamal Khashoggi last month, has requested numerous times that Saudi Arabia keep oil prices lower. According to sources cited by Reuters, the crown prince wishes to avoid confrontation with Washington, including on oil prices.
On Sunday, Trump complimented himself and took credit for lowering oil prices, comparing them to a tax cut for the US economy.
Riyadh agreed to raise its oil output steeply in June in response to calls from consumers, including the United States and India, to help cool oil prices and address supply shortages after Washington reimposed sanctions on Iran, the third-largest OPEC oil producer.