Saudi Energy Minister urges oil producers to extend cooperation
MUSCAT: Saudi Arabia’s Energy Minister has urged global oil producing nations to extend their cooperation beyond 2018, but said this might mean a new form of deal rather than continuing the same supply cuts that have boosted prices in recent months.
It was the first time that Saudi Arabia had publicly raised the possibility of a new form of coordination among oil producers after 2018. Their agreement on supply cuts, originally launched last January, is due to expire in December this year.
Khalid al-Falih, speaking to reporters ahead of a meeting later in the day of the joint ministerial committee which oversees implementation of the cuts, said extending cooperation would convince the world that coordination among producers was “here to stay”.
“We shouldn’t limit our efforts to 2018 – we need to be talking about a longer framework of cooperation,” Falih said. “I am talking about extending the framework that we started, which is the declaration of cooperation, beyond 2018.
“This doesn’t necessarily mean sticking barrel by barrel to the same limits or cuts, or production targets country by country that we signed up to in 2016, but assuring stakeholders, investors, consumers and the global community that this is something that is here to stay. And we are going to work together.”
Falih said the global economy had strengthened while supply cuts – in which Saudi Arabia has shouldered by far the largest burden – had shrunk oil inventories around the world. As a result, the oil market will return to balance in 2018, he said.
But he said producers still had a lot of hard work ahead to restore the market to health, and it was unlikely to reach balance by the middle of this year.