It is "inevitable" that OPEC and partners will agree next week to gradually roll back some of the production cuts that have been in place since January 2017, Saudi Arabia's Energy Minister Khalid al-Falih said on Thursday in Moscow.
Speaking to reporters after a meeting with Russia's Energy Minister Alexander Novak, the minister of OPEC's biggest producer Saudi Arabia, said, "I think it's inevitable."
"I think it will be a reasonable, moderate agreement. It's not going to be anything outlandish. We will be easing our ceilings back," al-Falih said, as quoted by Platts.
Asked about what he thinks the outcome of the much-anticipated meeting will be, al-Falih said:
"I think we'll come to an agreement that satisfies most importantly the market."
Russia and Saudi Arabia are leading a campaign to justify rolling back some of the OPEC/NOPEC production cuts, and are facing opposition from a bloc within OPEC consisting of Iran, Venezuela, and Iraq who oppose boosting production, also because those three don't have the spare capacity to lift production, unlike Russia and the Saudis.
Russia's Novak, for his part, said today that the ministers of the OPEC and non-OPEC producers could consider gradually reversing up to 1.5 million bpd of combined production.
Novak met with al-Falih in Moscow ahead of the Russia-vs-Saudi Arabia opening match of the World Cup and discussed a gradual exit from the cuts. Related: Can Saudi Arabia Prevent The Next Oil Shock?
"We in general support this... but specifics we will discuss with the ministers in a week," Novak told reporters today.
A week before the Vienna meeting and a day before the latest Russian-Saudi discussions on the cuts, U.S. President Donald Trump attacked OPEC again with a succinct tweet, "Oil prices are too high, OPEC is at it again. Not good!"
OPEC and its Russia-led non-OPEC allies are up for a very heated meeting next week, but it looks like the leaders of the two groups-Saudi Arabia and Russia-believe that they will persuade dissenters to agree to some sort of a production boost.
By Tsvetana Paraskova for Oilprice.com
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Comments
The real reason behind the Saudi minister’s statement is the request by President Trump to Saudi Arabia to ramp up oil production to replace any shortfall in Iranian oil exports as a result of the forthcoming US sanctions.
History is replete of examples of Saudi appeasement of the United States by quenching its addiction to oil, financing its wars and doing the United States' bidding.
Logic dictates that Saudi Arabia should continue to spearhead higher oil prices through the OPEC deal rather than lifting its production. By acceding to President Trump’s request, Saudi Arabia will be risking unravelling the OPEC deal that has brought virtually an end to the glut in the global oil market and pushed on prices to $80 and also inflicting huge damage again on its own economy.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London