OPEC will continue producing less crude oil than it could until at least June as April, when OPEC+ meets, would be too early to end the cuts, Saudi Arabia’s Energy Minister Khalid al-Falih said after a meeting with his Indian counterpart, as quoted by Reuters.
“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Al-Falih said, adding “We will see where the market is by June and adjust appropriately.”
According to the Saudi official, demand for crude will remain healthy this year, driven mainly by the United States and China. However, the former is becoming increasingly self-sufficient in oil, which might interfere with expectations for strong demand from that particular direction. Yet Al-Falih is optimistic.
“If you look at Venezuela alone you would panic, if you look at the U.S. you would say the world is awash with oil. You have to look at the market as a whole. We think 2019 demand is actually quite healthy,” the Saudi minister said, speaking to Reuters.
He noted rising demand in China, which he expected this year to hit 11 million bpd, of which much will be imported crude and a lot of this imported crude will come from Saudi Arabia. The Kingdom last month announced it was planning to increase its oil exports to China this year to about 1.5 million bpd from 1 million bpd at the moment as it seeks to gobble up a larger share of one of the world’s largest oil markets.
Saudi Arabia, Al-Falih said earlier this month, will continue pumping 9.8 million bpd in April as it plans to do this month, which is lower than what it agreed to produce under the December agreement. If it decides to maintain this production rate beyond April, however, this might rekindle concern about insufficient supplies.
India’s Oil Minister already urged the Saudis to make sure there is ample crude oil supply for the coming months, noting at the same time prices were rising higher than New Delhi would like to see them.
By Irina Slav for Oilprice.com
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