Brent crude and WTI: Oil prices tumble after Saudi minister rules out cut

 
Jessica Morris
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Saudi Oil Minister Ali al-Naimi attends
Ali al-Naimi ruled out a production cut (Source: Getty)

Oil prices tracked low this morning, after Saudi Arabia's oil minister reportedly said that investors should "forget about" a production cut.

Ali al-Naimi, told the al-Hayat newspaper that an outright production cut, as demanded by some producers, was out of the question.

"Forget about this topic," al-Naimi told the paper, reiterating the Kingdom's previous position on a possible reduction in his country's production.

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US benchmark West Texas Intermediate fell 1.7 per cent to $41.5 per barrel. Meanwhile, Brent crude, the global benchmark, slumped 1.2 per cent to $44.1.

A production cut would involve Opec and non-Opec members reducing their output. This would be a step further than an agreement to freeze production at a certain level, the latter of which is widely expected at a meeting in Doha on Sunday.

Increased optimism about the meeting helped oil prices climb to their highest level this year yesterday, partly due to a report that Russia and Saudi Arabia have agreed to hold production steady ahead of the meeting.

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Nevertheless, analysts and traders remained sceptical about the potential freeze deal’s ability to balance the oversupplied global oil markets – especially in the absence of Iran which has vowed to return oil output to pre-sanction levels.

"Investors have been burned before that Opec (the Organization of the Petroleum Exporting Countries) will do something - the fundamentals of this thought have shown to be made of sand," said Ben Le Brun, market analyst at Sydney's OptionsExpress.