Khalid Al-Falih, the Saudi energy minister, and his Russian counterpart Alexander Novak met Saturday and "re-emphasised their joint commitment to ensuring the adequacy of oil supplies
OPEC needs to keep working with other oil producers to manage global supplies as demand for crude faces “headwinds,” the head of the organization said.
The historic supply deal between Saudi Arabia, Russia and other producers reached in late 2016 needs to become permanent, Mohammad Barkindo, secretary-general of the Organization of Petroleum Exporting Countries, said Sunday in an interview in Dubai. Oil demand is “robust,” though crude use “is beginning to face some headwinds,” he said, without elaborating.
“There is no viable alternative on the table other than to institutionalize and make this cooperation between ourselves and our good partners from non-OPEC in a permanent fashion,” Barkindo said.
Low crude prices hit the oil industry and starved it of investment, leaving continued cooperation among producers as they only way to maintain stability in markets, he said.
Crude is averaging about $72 a barrel this year, and the International Energy Agency warned last week that prices could rise above $80 a barrel unless producers make up for lost supply from OPEC members Iran and Venezuela.
While trade disputes and financial woes in some emerging markets threaten to erode crude demand, the IEA, a watchdog of the industry, said that supply risks outweigh those concerns.
Saudi Arabia and Russia led OPEC and allied producers in agreeing to cap output starting in January 2017 to curb a glut. They changed course in June and have since pledged to ensure that supplies are adequate to meet demand.
A committee of OPEC members and allied producers is set to meet next week in Algeria to review compliance with their production targets, though it’s unclear whether the committee will try to enforce output quotas for individual countries.
Khalid Al-Falih, the Saudi energy minister, and his Russian counterpart Alexander Novak met Saturday and “re-emphasised their joint commitment to ensuring the adequacy of oil supplies, especially considering market uncertainties on the horizon,” the Saudi energy ministry said Sunday in a statement.
The ministers reviewed “the state of the global economy, oil demand and potential risks to supply,” according to the statement.
Iran’s crude sales are falling as the US prepares to restrict Tehran’s ability to sell oil and participate in global financial markets. Fellow OPEC-member Venezuela is pumping half as much oil as it did in 2016 and faces further declines amid economic upheaval.
Russia is ready to boost production to record levels, should the market require it, Energy Minister Novak said last week. Saudi Arabia, which has never pumped more than 11 million barrels a day, says it can produce at least 12 million. The kingdom is OPEC’s biggest producer and holds most of the group’s spare capacity.