Saudi Arabia in talks to cut crude output

However, market participants say the global energy market could see another period of excessive supply of crude oil as soon as next year - with oil bulls looking at Bakken anxiously.

Saudi Arabia expressed the need for oil producers to cut 1 million barrels a day from October levels and announced fewer shipments from next month, as OPEC and its allies began laying the groundwork to reduce oil supply in 2019, reversing an nearly year-long expansion.

"The Kingdom's crude exports for December will be 500,000 bpd lower than November", Saudi Energy Minister Khalid Al-Falih told reporters at the meeting in Abu Dhabi.

The UAE's energy minister, Suhail al-Mazrouei, said balancing the market would "require changes in the strategy" of producers.

There have also been signs that renewed USA sanctions on Iranian oil exports may have a softer-than-expected impact. He was speaking in Abu Dhabi, where an oil market monitoring committee was held on Sunday, attended by top exporters Saudi Arabia and Russian Federation.

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". Saudi Arabia will cut production as well as exports, he said.

On Thursday, the United States granted Iraq a 45-day exemption from sanctions which it reimposed on Iran.

The JMMC, a technical committee, is expected to make important recommendations on production cuts to a key ministerial meeting in Vienna next month for the OPEC and non-OPEC producers.

The Saudi announcement boosted Brent oil price from some $69/bbl to above $71/bbl Monday - as investors deemed a 0.5-percent cut to the total global supply as easing the concerns of overproduction.

Brent crude dropped below United States dollars 70 a barrel on Friday for the first time since April while the New York's West Texas Intermediate (WTI) sank below USD 60 a barrel, a nine-month low.

"There is no consensus yet among oil producers about cutting production", Falih said.

Oil prices shed a fifth of their value in just one month after surging to a four-year high in early October, driven by a combination of factors centred on higher supply and fears of sluggish demand.

In this light, Saudi Arabia has announced a new round of output cuts aimed at supporting the prices - which are, in the near-term, still expected to remain at that country's fiscal breakeven, estimated at roughly $70/bbl.

The proposed reduction is from October production levels, Falih said.

Decision comes amid fears of oversupply.

Falih said the USA sanctions had removed less oil from the market than expected because of the waivers.

Vanessa Coleman