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Saudi Oil Minister: Non-OPEC Producers Are Ready To Join Output Cut

Oil storage facilities

“Many countries” outside OPEC are willing to join the negotiations on a crude oil production reduction initiated by the cartel last month. That’s what Saudi Arabia’s oil minister Khalid al-Falih said today at the Oil & Money conference in London.

Without naming any names, Al-Falih said that behind-the-scenes talks are being held with non-OPEC producers who have declared their readiness to not just freeze, but to cut their production to match the organization’s attempt at rebalancing the markets.

The biggest non-OPEC oil producers in the world besides Russia and the U.S. include Canada, Norway, Mexico, China, India, Brazil, Azerbaijan, and Kazakhstan.

Two non-OPEC producer that’s already made its oil production intentions clear—or murky, rather, with regard to whether they will be freezing or cutting—is Russia and Azerbaijan. President Vladimir Putin said earlier this month at the World Energy Congress in Turkey the country will join efforts to bring oil’s fundamentals back to balance, but a fair amount of “freeze” chatter has also been going on in Russia.

Saudi Arabia in September made the first decisive step towards this return to balance by announcing it was willing to do more than just freeze its record-breaking output rate. The kingdom vouched to reduce it, on condition that Iran, a fellow OPEC member and a major competitor, would freeze its own production. Related: OPEC To Decide On US Joining Vienna Talks After Presidential Vote

Iran at the time rejected the offer, saying it would prefer to first bring its production rate to pre-sanction levels and then discuss a freeze. Oil minister Bijan Zanganeh, however, left the door open for further discussions at the November OPEC meeting, and Saudi Arabia was quick to go through that door, agreeing to let Iran ramp up its production before joining the freeze.

Nothing is final as of yet. Both Iran and Iraq missed the World Energy Congress that took place last week in Istanbul, giving rise to worries that they may tank - Saudi Arabia’s plans to get all OPEC members on board with any freeze/cut agreement.

What’s more, the Saudis have time and again demonstrated that international oil markets hang on their words, so until some of these non-OPEC producers confirm they are onboard with a production cut, it’s just plain speculation.

By Irina Slav for Oilprice.com

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