Saudi defiant on oil cuts after Trump tells OPEC to ‘relax’
OPEC cartel countries and other major oil producers in January began implementing a six-month deal to cut output by 1.2 million barrels per day to shore up sagging prices.
The deal has pushed prices higher but so far failed to boost them to their multi-year peak of $85 a barrel reached in October, triggering speculation of an extension of the deal to cut production.
“We remain flexible. I am leaning towards the likelihood of an extension in the second half” of this year for the output cuts, Khalid al-Falih, energy minister of the world’s top crude exporter Saudi Arabia, told CNBC television in Riyadh.
His comments come just two days after Trump criticised the producer group for rising crude prices.
“Oil prices getting too high. OPEC, please relax and take it easy,” Trump tweeted on Monday.
“World cannot take a price hike — fragile!”
Responding to the tweet, Falih said: “We are taking it easy.”
“The 25 countries are taking a very slow and measured approach… We are interested in market stability first and foremost,” he added.
Falih said it was hard to foresee the situation in June when the agreement between major oil producers, including Russia, expires.
“All of the outlooks that I have seen we’ll need to moderate production in the second half of this year, but you never know,” he said.
OPEC production fell to a four-year low in January as the cartel, and its unofficial leader Saudi Arabia, applied the new pact to shore up prices, the International Energy Agency said this month.
Trump has frequently called for OPEC to keep production high to limit rising oil prices that stem economic growth.
Oil prices crashed in mid-2014 to below $30 a barrel, down from over $100 a barrel, due to a glut in supplies and weakening global demand.
Speaking at a symposium organised by the Riyadh-based International Energy Forum, Falih said a lack of adequate investments in oil and gas, which OPEC estimates at $11 trillion by 2040, would see supplies fall short of demand.
“OPEC and our non-OPEC partners, led by Russia, continue to play their role in helping to balance the market,” the minister said.
“But sustaining that role requires timely investments, reliable supply, and appropriate spare capacity,” he added.
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