Saudis order oil cuts to US, Europe

VIENNA: Saudi Arabia has told its U.S. and European customers it will reduce oil deliveries from January, as Russia said it was confident non-OPEC producers would fully join OPEC's output limits on Saturday in the first such move since 2001.

Saudi Arabia told the customers about lower supplies in line with the output reduction agreed by the Organization of the Petroleum Exporting Countries last week, according to a Gulf oil industry source familiar with Saudi oil policy.

"We told our customers of the allocations and the compliance with allocations (for the cuts) for Saudi Arabia is 100 percent," the source said.

He said cuts to Asian refiners would be lower than those to Europe, the United States and to major oil companies.

"We are cutting more in the U.S. because the inventories ... are very high," the source said.

OPEC will meet non-OPEC producing countries in Vienna on Saturday, hoping non-OPEC will commit to cutting 600,000 barrels per day after its own members agreed to cut 1.2 million bpd last week.

OPEC sources said nine non-OPEC countries were set to join the meeting: Azerbaijan, Kazakhstan, Oman, Mexico, Russia, Sudan, South Sudan, Bahrain and Malaysia. Bolivia may also attend the talks, according to an OPEC source.

"There's a much greater presence than we expected ... and I think countries are coming for a reason," Ecuadorian foreign minister Guillaume Long who is representing the OPEC member at the meeting told Reuters.

So far only Russia and Oman have pledged cuts, with one OPEC source saying Mexico could also contribute as much as 150,000 bpd.

In contrast, Kazakhstan plans to boost output in 2017 as it launches the long-delayed Kashagan project.

Russia is expected to shoulder half of the non-OPEC cut, but on Friday sources in Moscow signaled there were snags that needed to be addressed before a deal could be reached, including full compliance with cuts by all parties involved.

However, Russia's energy minister told reporters upon arriving in Vienna he expected non-OPEC oil producers to fully contribute to production cuts agreed earlier with OPEC.

"I look with optimism at tomorrow's event," said Alexander Novak. "I think that we will agree and we must agree."