Dhahran: Saudi Arabia’s energy minister Khalid Al Falih yesterday said that he believed the oil market would balance itself in 2017 even if producers did not intervene, and that keeping output at current levels could therefore be justified.
Under a preliminary agreement reached in September in Algeria, Opec would reduce its production to between 32.5 million and 33m barrels per day (bpd), its first supply curb since 2008.
Organisation of the Petroleum Exporting Countries oil ministers meet in Vienna on Wednesday in an effort to finalise that deal; Opec also wants non-Opec producers such as Russia to support the intervention by curbing their output.
Al Falih said Saudi Arabia was sticking to its position on the Algiers agreement that everyone should co-operate.
“We expect the level of demand to be encouraging in 2017, and the market will reach balance in 2017 even if there is no intervention by Opec. But Opec intervention aims to expedite this balance and the market recovery at a faster pace,” he said.
Asked whether Saudi Arabia was keeping its output high in November at around 10.6m bpd, however, Al Falih said: “The level of demand for Saudi crude is still high and very healthy.”
“Regardless of Saudi and its market share, I think if we look at it as an indication of the health and recovery of the oil markets, it is a positive sign that makes us optimistic about the market recovery.”
“I don’t think that we have one path only in Opec meetings, which is cutting production – I think maintaining production at current levels is justifiable, taking into consideration the recovery of consumption and growth in developing markets and the US,” he added.
Al Falih, speaking at the headquarters of national oil giant Saudi Aramco, did not elaborate on Saudi Arabia’s planned production levels.
A meeting between Opec and non-Opec producers was originally due to be held today, but it was called off after Saudi Arabia declined to attend; Al Falih said this was because no agreement within Opec had been reached so far.
Libya’s National Oil Corporation (NOC) yesterday said it would not take part in any Opec production cuts for the “foreseeable future” as the north African country tries to bring crude output back towards pre-conflict levels.
“Libya is in such a dangerous economic situation, there is no way it can participate in Opec production cuts for the foreseeable future,” NOC chairman Mustafa Sanalla told delegates at the Arab-Austrian Economic Forum in Vienna, according to an NOC statement.
Libya has more than doubled its national crude production to around 600,000 bpd since several previously blockaded oil ports were reopened in September.
But output remains far below the 1.6m bpd the country was producing before its 2011 uprising, and Libya has been rapidly depleting its foreign exchanged reserves.
Libya had already indicated its reluctance to curtail production, and this week Opec will debate a proposal to cut production that would exempt Libya and Nigeria, another country where output has been hit by conflict.
The NOC hopes to raise production to 900,000 bpd by the end of this year and to 1.1m bpd in 2017, but the increases depend on the lifting of a blockade at pipelines serving the western fields of El Feel and Sharara.