Extend non-OPEC cooperation: Falih

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(From L to R) Omani Energy Minister Mohammed Al-Rumhy, OPEC Secretary General Mohammed Barkindo and Saudi Energy Minister Khalid Al-Falih at the 7th Meeting of the Joint Ministerial Monitoring Committee in Muscat on Sunday. — AFP

Muscat — Minister of Energy, Industry and Mineral Resources Khalid Al-Falih on Sunday called for extending cooperation between OPEC and non-OPEC oil producers beyond 2018 after a deal to shore up crude prices.

“We should not limit our efforts to 2018. We need to be talking about a longer framework for our cooperation,” Falih said before a meeting between OPEC and non-OPEC countries in Muscat.

This is the first time Saudi Arabia explicitly calls for extending a 2016 deal between oil producers to cut back production to combat a global oil glut.

OPEC and non-OPEC countries signed a landmark agreement in November 2016 to cut output by 1.8 million barrels per day to fight huge oversupply and lift sagging crude prices.

That deal was initially for six months, but the 14-member OPEC and 10 independent producers have since extended it until the end of this year.

“I am talking about extending the framework that we started — which is the declaration of cooperation — beyond 2018,” Falih told reporters.

But Falih said the new framework for cooperation might differ from the current agreement and its production quotas.

“It does not necessarily mean sticking barrel by barrel” to the same agreement, which has helped a healthy rebound in oil prices to around $70 a barrel.

It would mean “assuring stakeholders, investors, consumers and the global community that (the agreement) is here to stay”.

It would send the message that “we are going to work together not only with the 24 countries, but inviting more and more participants,” he said.

Falih said oil producers have not yet achieved their target of reducing world stocks to normal levels and striking a balance between supply and demand.

Falih said the global economy had strengthened while supply cuts — in which Saudi Arabia has shouldered by far the largest burden — had shrunk oil inventories around the world. As a result, the oil market will return to balance in 2018, he said.

But he said producers still had a lot of hard work ahead to restore the market to health, and it was unlikely to reach balance by the middle of this year.

Falih and energy ministers from the United Arab Emirates and Oman noted that the rise of the Brent oil price to three-year highs around $70 a barrel in recent weeks could cause an increase in supply of shale oil from the United States.

Excess oil inventories have declined by 220 million barrels from a level of 340 million barrels in early 2017, Falih said in a speech before the monitoring committee meeting. — Agencies


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