Riyadh stresses need to secure shipping lanes

TOKYO: Saudi Arabian Energy Minister Khalid Al Falih said on Monday that countries need to cooperate on keeping shipping lanes open for oil and other energy supplies ater last week’s tanker atacks in the Middle East to ensure stable supplies.

While he did not outline any concrete steps ater the atacks that damaged two tankers on June 13, Falih said the kingdom would do everything necessary to ensure safe passage of energy from Saudi Arabia and its allies in the region.

“We’ll protect our own infrastructure, our own territories and we are doing that despite the atempts to target some of our facilities,” Falih told reporters in Tokyo.

“But sea lanes of global trade need to be protected collectively by other powers as well. We believe that’s happening, but we need to make sure the rest of the world pays atention,” he said ater a Japan-saudi investment conference.

Falih expects the Organization of the Petroleum Exporting Countries (Opec) and other producers including Russia to meet the week ater the G20 summit to be held in Osaka on June 28-29, to discuss an extension of a supply output cut agreement.

Opec and other producers, an alliance known as Opec+, have a deal to cut output by 1.2 million barrels per day (bpd) from Jan. 1. The pact ends this month and the group meets in coming weeks to decide their next move.

Falih said that Opec was moving was towards a consensus on extending the agreement.

He said earlier this month that Opec was close to agreeing to extend a pact on cuting oil supplies beyond June, although more talks were still needed with NON-OPEC countries.

When asked if Russia is going to agree to continue the cuts, Falih said “absolutely.” “We are maintaining the proper levels of supply that we have been having to bring inventory levels to where they belong. I hope that will continue in the second half with the assurances I have received from all the Opec+ countries,” he said.

There was full commitment to put in place “a long term framework between the Opec+ coalition to ensure that we work together” from next year, he said.

Oil demand growth has held up despite trade disputes roiling global markets, Falih said, adding he expects worldwide demand to be above 100 million barrels per day this year.

“We are not seeing a slowdown from either China, the US, India or other developed economies.

Oil prices rose on Monday ater US Secretary of State Mike Pompeo said Washington will take all actions necessary to guarantee safe navigation in the Middle East, as tensions mounted following atacks on tankers last week.

Brent futures had climbed 26 cents, or 0.4%, to $62.27 a barrel by 0314 GMT. They gained 1.1% on Friday.

US West Texas Intermediate (WTI) crude futures were up 17 cents, or 0.3%, at $52.68 a barrel. They rose 0.4% in the previous session.

Prices had jumped as much as 4.5% on Thursday ater the atacks on two oil tankers near Iran and the Strait of Hormuz.

It was the second time in a month tankers have been atacked in the world’s most important zone for oil supplies as tensions increase between the United States and Iran. Washington blamed Iran for Thursday’s atacks, prompting a denial and criticism from Tehran.

“We don’t want war. We’ve done what we can to deter this,” Pompeo said in an interview with Fox News Sunday, adding: “The Iranians should understand very clearly that we will continue to take actions that deter Iran from engaging in this kind of behaviour”.

Tensions between Iran and the United States have risen since US President Donald Trump pulled out of a deal last year between Iran and global powers that aimed to curb Tehran’s nuclear ambitions in exchange for sanctions relief.

Iran has repeatedly warned it would block the Strait of Hormuz if it cannot sell its oil because of US sanctions.

“Growing tensions in the Middle East remain a cause for concern as traders fear supply disruptions over an escalation towards militaristic conflicts,” said Benjamin Lu, an analyst at Phillip Futures in Singapore.

Also supporting prices were comments over the weekend by the Saudi energy minister, Khalid al-falih, that Opec would probably meet in the first week of July and he hoped it would reach an agreement on extending oil output curbs.

“We are hoping that we will reach consensus to extend our agreement when we meet in two weeks time in Vienna,” Falih told reporters while atending a G20 energy and environment ministerial meeting in Karuizawa, northwest of Tokyo.

The Organization of the Petroleum Exporting Countries plus Russia and other producers, an alliance known as Opec+, have a deal to cut output by 1.2 million barrels per day (bpd) from Jan. 1. The pact ends this month and the group meets in coming weeks to decide the next move.