Saudi Arabia’s energy minister said today that oil-producing countries might have to extend output cuts agreed for the first six months of the year in order to achieve the desired rebalancing of the market. “We might have to extend in order to reach the target… of stock levels,” Khalid al-Falih told an energy forum in Abu Dhabi, referring to a deal between OPEC and non-OPEC producers to cut production by around 1.8 million barrels per day.
Falih, whose country is the world’s largest exporter, said there was a sort of “initial agreement ” on the need to extend the deal after talks in Kuwait last month. He said producers would continue to assess market figures until next month, when ministers are expected to take a final decision at a meeting in Vienna.
“There was a high level of commitment in the first three months, but despite that, we have not achieved the target” of reducing the supply glut, he said. OPEC members agreed in November to cut production by 1.2 million barrels per day for six months beginning from the start of the year in a bid to shore up prices.
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Some non-cartel producers, led by Russia, joined in December by committing to cut output by 558,000 bpd. Kuwaiti Oil Minister Issam al-Marzooq said there was a “significant” commitment by producers from outside OPEC, and called for prolonging the cuts.
“It is important that we agree to extend the agreement,” he told the forum. Oil prices currently hover just over $50 per barrel after shedding around half of their value since mid-2014.