Some 1.5 million of an agreed upon 1.8 million barrels per day of oil has been taken out of the market in January, Saudi Arabian Energy Minister Khalid al-Falih said Friday, noting, however, that at the same time, shale oil is estimated to grow this year at 200,000 to 300,000 barrels per day.
Al-Falih also noted that the International Energy Agency (IEA) estimate that shale oil production would increase by 500,000 barrels per day was exaggerated.
At the World Economic Forum in Davos, Falih said that there had been “very strong compliance” by OPEC and non-OPEC oil countries to the production cuts agreed on in December, and that the producers had gone “extra miles”, with the majority exceeding their commitments.
“A very high level of data available” shows higher compliance in the first part of January, he said.
The International Energy Agency has also confirmed that global oil output is dropping.
“The higher oil prices prompted by the production cut could see a rise in output from US shale gas producers,” said the IEA’s executive director, Fatih Birol.
Al-Falih indicated that OPEC countries could cut oil production again this year, repeating last year’s agreement, if higher prices were not maintained due to reasons beyond the control of producers, including falling demand.
"I think Plan B is to be resilient and to be flexible and to deal with the circumstances," he said.
"There have been times in the past where OPEC has taken one action and then a few months later found out that that action was not sufficient and followed up with another action," he said. "We will not exclude that and that's why we're meeting up again in May."
Asked if that could involve further cuts, the minister said "if needed, absolutely."
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By Damir Kaletovic for Oilprice.com
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