Moscow: Saudi Arabia’s oil minister said it’s “inevitable” that Opec and its allies will agree to boost oil output gradually, giving the most definitive signal yet that the cartel will alleviate high prices for consumers.
“I think we’ll come to an agreement that satisfies most importantly the market,” Khalid Al Falih told reporters in Moscow on Thursday, when asked about the outcome of the meeting between the Organisation of Petroleum Exporting Countries and its allies in Vienna next week. “I think it will be a reasonable and moderate agreement” but nothing “outlandish,” he said.
Russia and Saudi Arabia, leaders of the deal that curbed crude output and boosted prices to three-year highs, were to discuss their next move in Moscow on Thursday as the two nations face off in the football World Cup. They face growing pressure, not least from the Twitter account of US President Donald Trump, to increase supply to offset disruptions caused by the economic crisis in Venezuela and renewed American sanctions on Iran.
For Al Falih, the assertion of inevitability is a gamble on his ability to persuade those two nations to drop their opposition to an output increase in face-to-face meetings in the Austrian capital next week. So far, Caracas and Tehran have been adamant that Opec doesn’t need to boost production this year, and have warned against responding to political pressure from Washington.
“The Trump administration is trying to intervene in the affairs of a sovereign organisation,” Hussain Kazempour Ardebili, the most senior Iranian official attending Opec meetings after the oil minister, said in an interview on Wednesday. Such attempts have failed in the past and “they will also fail” yet again, he said.
Iraq, Opec’s second-largest producer, said the group should resist pressure to increase oil supplies because its curbs haven’t yet achieved their purpose, with crude prices still below the desired level.
At Thursday’s football match, Russian President Vladimir Putin and Saudi Crown Prince Mohammad Bin Salman, along with Al Falih and his Russian counterpart Alexander Novak, were to discuss how to boost oil production while maintaining their petro-alliance and overcoming opposition.
Both nations have proposed plans for the so-called Opec+ group to add as much as 1 million barrels a day, about 1 per cent of global output, although Riyadh prefers a smaller increase, according to people familiar with the matter.
The two countries share a common view that production should increase gradually, but the precise volume of oil that could be returned to the market and the timing of the boost are still under discussion, Novak said in an interview earlier on Thursday.
Oil prices steadied on Thursday, but still faced pressure from evidence of rising US output and uncertainty over the outlook for supply before a meeting next week of the world’s largest exporters. Benchmark Brent crude oil was up 10 cents at $76.84 a barrel by 1320 GMT, while US light crude was 45 cents higher at $67.09.
Brent hit a high of $80 a barrel in May but has since drifted lower, indicating investors expect the market to become better supplied in the next few months as US crude production rises and as key Middle East exporters and Russia pump more.