Saudis Leaning Toward OPEC Cut Extension

Saudi Arabia's Energy Minister Khalid al-Falih said on Wednesday that he was leaning toward an extension of the OPEC+ production cuts after June, although he noted that the producer group would take a measured approach not to tighten the oil market too much.

Asked to comment on President Trump's tweet from earlier this week that called on OPEC "to take it easy," al-Falih told CNBC on the sidelines of an OPEC symposium in Riyadh that "We are taking it easy."

"Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!" President Trump tweeted on Monday in his latest criticism of OPEC's cuts aimed at rebalancing the market and lifting prices.

The tweet sent oil prices tumbling by more than 2 percent on Monday, but a surprise draw in crude oil inventory of 4.2 million barrels for the week ending February 22 reported by the American Petroleum Institute (API) helped lift the price of oil on Tuesday.

Referring to OPEC and allies' approach to the production cuts, al-Falih told CNBC today:

"We remain flexible, I am leaning toward the likelihood of an extension in the second half (of 2019), but that's not automatic."

"If we find out the fundamentals are tightening, by June you can bet that I will be - just like we did last year - encouraging my colleagues within the OPEC plus to ease the voluntary limits we set on ourselves and to increase supplies to ensure that there is no unnecessary tightening in the market," the Saudi minister said.   Related: Why Oil Tanker Rates Just Doubled

OPEC and its Russia-led non-OPEC partners in the production cut deal are withholding a total of 1.2 million bpd from the market between January and June and are set to review the state of the oil fundamentals and market, and possibly the cuts, in April.  

Responding to a question about President Trump's tweet, al-Falih said:

"We listen to the honorable president, and hear his concern about consumers and assure everybody, whether it's him or developing country leaders, that we are as focused on the interests of the global economy and consumers around the world as we are focused on the interests of producers."

By Tsvetana Paraskova for Oilprice.com

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