Saudi Arabia’s top oil official said he was sure that Opec+ will extend production cuts into the second half of the year after holding talks with Russia.
Ministers from Saudi Arabia and Russia voiced similar concerns about the impact of a slowing global economy on oil prices and talked up the benefits of cooperation. The unified front presented on Friday appeared to resolve signs of division visible in the previous days.
Still, the two leaders of the coalition between the Opec and several non-members stopped short of any specific commitments on production volumes after the current output deal expires at the end of this month. They were also unable to fix a date for a meeting to discuss the matter with fellow ministers.
Opec+ is an alliance of 14 Opec members and ten other member nations, notable among them Russia, Mexico and Kazakhstan.
“I don’t think the question is at all whether we will extend or not,” Saudi Energy Minister Khalid Al Falih said after a panel at the St. Petersburg International Economic Forum on Friday. “A rollover is almost in the bag for Opec. The question is to calibrate with non-Opec if there needs to be an adjustment from the first half.”
Diverging interests and surging market volatility are making the ministers’ decisions more difficult. Oil is torn between the bearish influence of US-instigated trade wars and the bullish threat of supply disruptions from Iran to Venezuela.
“I don’t think there will be a need to deepen the cut, but whether we need to scale it back a little bit will depend on what happens in Iran, Venezuela, other countries,” Mr Al Falih said.
Russian energy minister Alexander Novak said, “The biggest drivers are now sanctions, tariff wars” and they cannot be predicted. “The situation in the market is far from being a positive one” and demand growth may slow to below 1 million barrels per day, so the Opec+ deal “is a very great instrument for dealing with this uncertainty.”
Brent crude advanced as the ministers spoke, rising as much as 2.4 per cent to $63.12 bpd pn Friday.
Saudi Arabia is able to tolerate lower crude prices than almost anyone else, Mr Al Falih said. However, letting the market slump again like it did in 2015 would be “unacceptable,” he said.
