Saudi oil minister hopes OPEC, allies can ease output
curbs in 2019
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[February 24, 2018]
By Nidhi Verma and Sudarshan Varadhan
NEW DELHI, Feb 24 (Reuters) - Saudi Arabia
hopes OPEC and its allies will be able to relax production curbs next
year and create a permanent framework to stabilize oil markets after the
current supply cut deal ends this year, its oil minister said on
The Organization of the Petroleum Exporting Countries is reducing output
by about 1.2 million barrels per day (bpd) as part of a deal with Russia
and other non-OPEC producers.
The pact, aimed at propping oil prices, began in January 2017 and will
run until the end of 2018.
Saudi Arabian oil minister Khalid al-Falih said OPEC and its allies were
committed to bringing balance and stability to the market and that he
hoped it would be possible to ease output curbs next year.
"A study is taking place and once we know exactly what balancing the
market will entail we will announce what is the next step. The next step
may be easing of the production constraints," he told reporters in New
"My estimation is that it will happen sometime in 2019. But we don't
know when and we don't know how."
Falih said OPEC was determined to translate the success of the deal to
curb supply into a permanent framework with other major producers.
"What we want is an evergreen framework that brings producers from OPEC
and non-OPEC (countries) together in a market monitoring fashion that
allows us to take quick decisions," he said.
"I think everybody has learnt, producers as well as consumers, that a
market without a steering wheel is very destructive, very damaging to
the interests of all," he said.
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Falih said compliance with the output cuts in January was "exceptional."
Oil prices have doubled from their lows in 2015-2016 after the cuts.
Falih said the market had absorbed rising U.S. shale oil production, as output
from countries such as Venezuela and Mexico had declined.
U.S. oil inventories fell last week.
Saudi Arabia, the world's biggest oil exporter, in March cut production and
exported less than 7 million bpd due to seasonally soft demand.
Falih said that in January-March, Saudi Arabia's oil production was well below
the production cap, with exports averaging below 7 million bpd.
State oil company Saudi Aramco has signed a preliminary deal to invest in
India's planned 1.2 million bpd West Coast refinery. Falih said Aramco was also
looking at buying stakes in existing major refiners and expansion projects in
He did not specify the size of stake Aramco will take in the west coast
refinery, but added "the more the better."
India aims to expand its refining capacity by 77 percent to about 8.8 million
bpd by 2030.
Falih said Saudi Arabia would also sign oil supply deals as part of the
agreement to buy stakes in Indian refineries, a strategy the kingdom has adopted
to expand its market share in Asia and fend off rivals.
Last year, Saudi Arabia pledged billions of dollars of investments in projects
in Indonesia and Malaysia to secure long-term oil supply deals. (Reporting by
Nidhi Verma and Sudarshan Varadhan; Editing by Mark Potter)
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