Saudi says oil price down cycle ‘nearing end’
Iraq should be exempted from OPEC output freeze: minister
RIYADH, Oct 23, (Agencies): Saudi Oil Minister Khalid al-Falih said on Sunday that the current cycle of falling crude prices is close to an end as market fundamentals improve.
Oil prices are currently hovering at around $50 per barrel after hitting a 10-year low of less than $30 in January, down from a peak of more than $100 in mid-2014.
“The current down cycle is nearing an end,” Falih told a joint press conference with his Russian counterpart Alexander Novak on Sunday after a Gulf ministerial meeting in Riyadh.
“Market fundamentals, in terms of supply and demand, have begun to improve,” Falih said, adding: “We are optimistic that oil prices will continue to improve in the future.”
Qatar’s energy minister, Mohammed al-Sada, whose country holds the rotating presidency of the OPEC oil exporting cartel, also said the “difficult phase is over”.
“Although the market is heading to being balanced, it needs our joint effort, and we all agreed that we need to take measures to bring back this balance,” he said.
Novak said he and his Gulf counterparts had discussed ways to “develop the best mechanism to solve the issue of stabilisation”.
“We have reached an unprecedented level in our relations and cooperation” with Saudi Arabia, he told reporters, adding that he agreed with Falih “to continue to work and remain in continuous contact to achieve ... concrete mechanisms”.
OPEC has invited Russia and key non-members to a meeting later this month as the cartel and Moscow seek to tighten cooperation to boost historically low crude prices.
The invitation was announced after a meeting between top OPEC energy ministers and Novak in Istanbul, aimed at advancing joint efforts to bolster oil prices whose lows have hurt the highly dependent economies of crude producers. The cartel and Russia will meet on Monday, ahead of the OPEC technical meeting in Vienna on Oct 28-29, to which Russia and others have been invited.
Last month at a meeting in Algiers, the cartel agreed its first production cut in eight years, although it remains to be seen how this will be complied with and implemented.
President Nicolas Maduro of OPEC member Venezuela was in Riyadh Sunday for talks a day after calling in Iran for increased cooperation between oil-rich nations to stabilise prices.
Maduro, who is also due to visit Qatar on a Middle East tour, currently faces an economic and political crisis at home, compounded by the collapsing price of oil.
Iraq should be exempt from OPEC crude output restrictions as it needs the income to fight the war on Islamic State, Oil Minister Jabar Ali al-Luaibi said on Sunday.
“We are fighting a vicious war,” Luaibi said in a briefing for reporters in Baghdad, adding that Iraq, OPEC’s second-largest producer, should get the same exemption as Nigeria and Libya.
The Organization of the Petroleum Exporting Countries agreed in Algiers on Sept. 28 to reduce production to a range of 32.50 million to 33.0 million barrels per day, its first output cut since 2008, in order to support prices.
OPEC says it pumped 33.39 million bpd in September.
Iran, Libya and Nigeria, whose output has been hit by sanctions or conflict, have asked to be exempted from the cuts.
Falah al-Amiri, head of Iraq state oil marketer SOMO, said Iraq’s market share had been compromised by the wars it has fought since the 1980s.
“We should be producing 9 million (barrels per day) if it wasn’t for the wars,” he said at the same briefing. “Some countries took our market share.”
Iraq started an offensive last Monday to take back Mosul, Islamic State’s last major city stronghold in Iraq, with air and ground support from a US-led coalition.
Luaibi said he supported OPEC’s policy of restraining supply in order to support prices, and he would put Iraq’s case for an exemption.
OPEC ministers have left aside the delicate and critical issue of how much each of the 14 OPEC members will produce, handing the matter to what the group terms a High Level Committee.