OPEC’s biggest producer and de facto leader Saudi Arabia hopes that the cartel and its Russia-led non-OPEC partners in the production cut deal will sign an ‘open-ended’ cooperation deal when they meet in Vienna in December, Saudi Arabia’s Energy Minister Khalid al-Falih told Russian news agency TASS in an interview published on Monday.
Asked to elaborate on the OPEC/non-OPEC plans about the future of the production cut deal, which expires at the end of this year, al-Falih said that the OPEC+ alliance has been working for nearly two years, and “we want to sign a new cooperation agreement that is open-ended.”
“That does not expire after 2020 or 2021. We will leave it open. And what we would like to do is continue for OPEC and non-OPEC to work together. And the difference is that there will be no fixed term for the agreement, which allows us to bring production up or down. It should not have fixed production target,” al-Falih told TASS.
Such open-ended deal would allow the participants to regularly coordinate and share information and views about the oil market, supply and demand, and what kind of intervention the alliance needs to make, if any, al-Falih said, pointing to an alliance that could be coordinating a large part of the world’s oil supply for years, and maybe decades, to come.
Many countries have expressed a willingness for closer cooperation with OPEC without joining OPEC, the Saudi minister added.
“And we respect this approach. Russia is one of those countries,” al-Falih said. Related: U.S. Shale Has A Glaring Problem
The Saudi energy minister hopes that when OPEC and allies meet in Vienna on December 7, they will be able to sign that long-term ‘open-ended’ deal, which would begin “in January 2019 and it will allow us to intervene to rebalance the market in any appropriate time from January onward.”
Looking to 2019, al-Falih said that there were many uncertainties in both demand and supply, with demand that could slow down with trade wars, weak emerging markets and currencies, and possible supply declines from Iran, Libya, Nigeria, Venezuela, and Mexico.
“I think there are many uncertainties about 2019 that it is very premature for us to say what we will do. The only certainty for 2019 is that we need to be ready to act promptly and effectively,” al-Falih told TASS.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Is There Too Much Light Crude On The Market?
- Oilfield Service Companies Bet On Full Recovery
- Riyadh Has “No Intention” Of Repeating 1973 Oil Embargo