Saudi Arabia on Sunday, January 21, 2018, called for extending cooperation between OPEC and non-OPEC producers beyond 2018, after a deal to cut output succeeded in shoring up oil prices This is the first invitation by Saudi Arabia for long-term cooperation between oil producers and it is at the heels of oil prices topping the $70 per barrel mark from below $30 in 2016.
The Saudi Energy Minister Khaled al-Faleh said to reporters before a meeting between ministers of OPEC and non-OPEC countries in Oman “We should not limit our efforts to 2018. We need to be talking about a longer framework for our cooperation,” The meeting would discuss levels of compliance with the cuts.
Oil producer members and non-members of the Organisation of Petroleum Exporting Countries had signed a landmark agreement in November 2016 to cut output by 1.8 million barrels per day to fight oversupply and lift sagging prices. The deal was initially for six months, however, the 14 members of OPEC and 10 independent producers have since extended it until the end of 2018.
Officials from the participating countries have been meeting to fine-tune the agreement and possibly extend it depending on the oil market situation. However, the Saudi minister says the agreement should be extended for an unspecified duration. “I am talking about extending the framework that we started –- which is the declaration of cooperation -– beyond 2018, We must not relax’ Faleh told reporters
Faleh, also, 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. It could 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 invite more and more participants,” he said.
Faleh said oil producers had not yet achieved their target of reducing world stocks to normal levels and striking a balance between supply and demand. He called for efforts to continue to bring inventories to “normal levels”. “That objective has not been achieved. We are not close to achieving it,” said Faleh, adding that a rebalance is unlikely in the first half of 2018.
Russian Energy Minister Alexander Novak said oil producers should not ease off on their efforts despite the rebound. He said “despite the fact that progress is obvious, we must not relax. We are determined to carry through the rebalancing,” Novak’s, country is the world’s top crude producer.