ANALYSIS – Saudi Arabia lays ground for more OPEC action

DUBAI/LONDON, Sept 19 (Reuters) – OPEC’s surprisingly tough output deal last week lays the foundation for more decisive action to prop up weakened oil markets and it could involve the possible collaboration of leading non-OPEC producer Russia.

Until OPEC reached agreement in the early hours of Sept. 10, most had anticipated the group would leave production unchanged.


But top oil exporter Saudi Arabia, which before the meeting said the market was fine as it was, put its name to the Organization of the Petroleum Exporting Countries’ (OPEC) unanimous decision to throttle back to agreed output levels.

“The agreement was a surprise,” said one OPEC delegate. “We had all expected there to be no change.”

Saudi Oil Minister Ali al-Naimi may have decided he had done enough to bring markets back under OPEC control, said analyst David Kirsch of PFC Energy.

By agreeing to cut, Saudi Arabia could be earning support ahead of the tougher task of coordinating deeper OPEC supply reductions if demand continued to fall, he added.

Reuters