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Saudis contact oil firms in response to seven-month low

An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia, on Wednesday, Oct. 3, 2018. Saudi Aramco aims to become a global refiner and chemical maker, seeking to profit from parts of the oil industry where demand is growing the fastest while also underpinning the kingdom’s economic diversification. Photographer: Simon Dawson/Bloomberg
An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia, on Wednesday, Oct. 3, 2018. Saudi Aramco aims to become a global refiner and chemical maker, seeking to profit from parts of the oil industry where demand is growing the fastest while also underpinning the kingdom’s economic diversification. Photographer: Simon Dawson/Bloomberg

Saudi Arabia has phoned other oil producers to discuss possible policy responses as oil prices fell to a seven-month low, a Saudi official said.

The kingdom won’t tolerate a continued slide in prices and is considering all options, the official said, asking not to be identified discussing private talks. He didn’t say what measures were being discussed.

Saudi Arabia, the world’s largest oil exporter, has already cut production more than required under the agreement between the Organization of Petroleum Exporting Countries and allies outside of the group.

Oil has been swept up in a global market meltdown as the U.S.-China trade dispute worsened, spurring fears it would morph into a currency war. The deteriorating economic situation prompted rate cuts this week in New Zealand, India and Thailand amid concern there could be a recession.

West Texas Intermediate crude rebounded Thursday after the Saudi efforts were revealed, following Wednesday’s 4.7% plunge. The U.S. benchmark crude rose 3.2% to $52.72 a barrel as of 1:07 p.m. in Singapore.

Planned gatherings in Abu Dhabi in the week starting Sept. 9 will be critical for leaders of the OPEC+ group, especially the Saudi and Russian energy ministers, to signal their intentions on production in the wake of oil’s price collapse, said Helima Croft, chief commodities strategist at RBC Capital Markets.

“This has been a tough week for them,” Croft said. “I do not think that these guys are complacent. I can imagine that Secretary General Barkindo is on the phone with Khalid Al-Falih and Alexander Novak right now. I can imagine the dialog is pretty ferocious.”

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