Saudi Arabia will consider renewing its pledge to cut crude output in six months, and its Energy Minister Khalid Al-Falih said that the kingdom has reduced oil production to less than 10 million barrels a day, below its targeted level.
Currently, the production output is at a 22-month low for the world’s biggest oil exporter. As s part of a global deal to reduce output to curb a supply glut, it had agreed to cut 486,000 barrels a day to 10.058 million barrels a day. Al-Falih said in a speech at an energy conference in Abu Dhabi that the market and support prices would be balanced by the caps on production, together with rising demand and natural decreases in output in some countries.
“Oil production now is below 10 million so far,” he told reporters later on Thursday. “So, we’re going the extra mile to lead our colleagues within and outside of OPEC to make sure that the market sees that there’s serious action in place.”
According to that country’s oil minister, Kuwait has also exceeded its targeted cut. His nation too will reduce output by more than its quota, Algeria’s energy minister said.
To assess the market and the group’s production policy, Saudi Arabia is due to meet fellow members of the Organization of Petroleum Exporting Countries in May at their bi-annual meeting in Vienna.
To monitor their compliance with the production cuts, which aim at shoring up prices, OPEC states will also gather with major producers outside the group later this month in the Austrian capital.
“We have been moving toward a re-balanced market for some time — too slowly to my liking,” Al-Falih said. “The pace of re-balancing will be accelerated due to the recent agreements within OPEC and with our party from outside” the group. “We will consider renewing” the agreement after six months, he said. Saudi oil output was last below 10 million barrels a day in February 2015, according to data compiled by Bloomberg.
Crude-producing countries will decide in May whether to extend their output cuts beyond the first half and global oil inventories will start to fall by the second quarter of this year, OPEC Secretary-General Mohammad Barkindo, said at the same event and Al-Falih’s comments amplified those remarks made earlier.
Barkindo said at the Atlantic Council Global Energy Forum that the agreement between OPEC and non-OPEC producers to pare output have created “positive” reaction from global macroeconomic numbers. “We have our target in accelerating those draw-downs to bring them closer to the five-year level — that is our target,” he told reporters. OPEC isn’t targeting a specific price for crude, he said.
He expects that the decline in oil inventories will take two years, said Total SA Chief Executive Officer Patrick Pouyanne, speaking at the same event.
Having started on Jan. 1, the cuts are to stay in effect through to June. United Arab Emirates Energy Minister Suhail Al Mazrouei said at the Abu Dhabi conference that it’s premature to decide whether additional cuts will be needed and oil markets should be in balance in six months. He said that contributing to a decrease in global production are countries with a naturally declining output of oil.
Oil Minister Essam Al-Marzouk said at the conference that Kuwait is currently producing 2.7 million barrels a day and has cut 133,000 barrels a day of oil output. He said that Kuwait’s crude exports would reflect the production cut. In the global deal to reduce output, Kuwait had agreed to cut 131,000 barrels a day.
(Adapted from Bloomberg)
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