Saudis Flood Market to Press OPEC on Curbs

Saudi Arabia is keeping its oil output high two weeks ahead of a crucial Nov. 21 OPEC meeting in a bid to force the cartel into accepting a binding agreement to curb production, Persian Gulf oil industry sources said Monday.

But they said Riyadh simply wants to keep pressure on other OPEC members, not to push prices sharply lower.

“Saudi Arabia is not after a price collapse, they want to keep the pressure on OPEC,” one analyst said.

The Saudis’ recent policy of exceeding the quota assigned them by the 13-nation Organization of Petroleum Exporting Countries has helped force prices to two-year lows in the past two months.

The benchmark U.S. crude, West Texas Intermediate, for December delivery closed 2 cents lower at $14.06 in extremely quiet New York trading Monday.

Gulf oil sources said the Saudi’s aim is to persuade cash-strapped OPEC members, whose oil ministers meet in Vienna on Nov. 21, that they must agree on new output limits to help prices recover.

“Saudi Arabia wants an output accord that will last longer than the current one . . . and one everyone will abide by as long as it is there,” one analyst said.

Analysts also said that Saudi Arabia would keep its output high until a viable agreement was reached.

The kingdom, with a quota of 4.343 million barrels per day, pumped an average of 5.65 million barrels per day in October, according to a Reuters survey. Sources said output in the past week of October reached 7 million barrels per day, the highest this year.

Saudi Arabia initiated a proposal by the six Arab producers in the Gulf Cooperation Council last month to raise OPEC’s total output ceiling to 17.429 million barrels per day.