Saudi Arabian Energy Minister Khalid Al-Falih told Reuters late on Thursday that “we don’t believe any significant intervention in the market is necessary other than to allow the forces of supply and demand to do the work for us”, adding that the “market is moving in the right direction” already.
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Saudi Arabia kept its spot as China’s biggest oil supplier for the first seven months this year after pumping record output in July, even as Russian Federation threatens to overtake the Kingdom in their contest for sales to the world’s largest energy consumer. “I certainly don’t advocate a cut”.
Talks are scheduled in Algiers, Algeria, in September to discuss a global output freeze pact. Benchmark Brent crude settled at $49.67/bbl on Thursday in London.
The kingdom produced 10.67 million barrels per day of crude oil, the most in its history, in July, and Al-Falih said on Thursday that production has remained around that level, though he could not cite a specific number for August.
“It’s not just the matter of a production freeze or a cap, but there are geopolitical concerns involved too, especially when it comes to Iran and Saudi Arabia”, he said. Iran had ruled out a ceiling on its production until it recovered the output levels it had before the USA and European Union tightened worldwide sanctions on its oil industry in 2012. With output high, not just from OPEC but also other top producers like Russian Federation, and the demand outlook shaky, analysts said there was little prospect of an end to the glut, which has pulled down crude prices from over $100 a barrel to their current sub-$50 levels since 2014. “It is trending towards soaking up and absorbing, removing, the inventory overhang”. The group’s capacity is 36.9 MMbpd, with most of that in Saudi Arabia, the world’s largest exporter.
Al-Falih said no specific production level for a freeze has been broached yet.
Iran’s production has risen to 3.85 MMbopd since sanctions were eased in January, Zanganeh said this month, still less than its target for the end of this year of 4 MMbopd. “Even if producers come to an agreement, the freeze is at a very high level”.
The United States had reported on Wednesday another incident where it said Iranian vessels harassed a US warship near the Strait of Hormuz earlier this week.
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The cartel’s members are expected to take up the topic of a freeze in an informal meeting on the sidelines of the International Energy Forum in Algeria in September.
