WORLD> Middle East
Saudis signal deeper oil output cut than expected
(Agencies)
Updated: 2008-12-12 07:57

Saudi Arabia, the world's biggest oil exporter, cut production more than traders and analysts had estimated last month as crude prices plunged, figures from the oil minister show.

The kingdom pumped 8.493 million barrels of oil a day in November, Oil Minister Ali al-Naimi said yesterday in an interview in Poznan, Poland. That's 287,000 barrels a day less than estimated by the International Energy Agency, and close to Saudi's OPEC quota of 8.477 million barrels. Oil prices rallied as much as 5.5 percent to $45.93 a barrel.

"The Saudis might have been impatient with the market's skepticism, so they've decided some transparency is needed," said Mike Wittner, head of oil market research at Societe Generale SA in London.

"It shows they're deadly serious about cutting already and serious about cutting more."

Al-Naimi said Saudi output was "absolutely" in line with its quota agreed by the Organization of Petroleum Exporting Countries, which is scheduled to meet on Dec 17 in Oran, Algeria. Last month he said $75 a barrel is a fair price for crude.

November data on OPEC indicated the group was producing well in excess of quotas agreed at a meeting in October, where the organization resolved to cut production by 1.5 million barrels a day to halt the plunge in prices.

The 11 members subject to formal limits pumped 28.24 million barrels a day last month, according to Bloomberg estimates, compared with a ceiling of 27.3 million barrels a day.

"Everybody was looking to Saudi Arabia and saying they have to do something otherwise we will have even lower prices," said Ehsan Ul-Haq, head of research at Vienna-based JBC Energy GmbH. "Now Saudi Arabia can say they are complying fully and everybody should do the same."

Crude oil futures traded in New York rose as much as $2.41 a barrel. They traded at $45.84 at 10:50 am London time.

OPEC President Chakib Khelil along with officials from Libya, Qatar, Venezuela and Iran have said the organization will need to announce further cuts at next week's summit after prices collapsed to near $40 a barrel last week.