Saudi Energy Minister Khalid al-Falih said on Sunday the oil market is “on the right track” and will quickly return to balance, but oil producers are willing to do more if needed.
“If we look beyond the noise of weekly data and speculators’ herd-like behavior, I remain convinced that we’re on the right track, and that the oil market will quickly return to balance,” said Falih.
Addressing an oil conference in Abu Dhabi, he said if his country finds that more needs to be done, it will do so in unison with OPEC and non-OPEC partners, where collaboration is essential too.
The Organization of the Petroleum Exporting Countries (OPEC) and other leading global oil producers led by Russia agreed in December to cut their combined oil output by 1.2 million barrels per day starting from January to prevent a supply glut and boost sagging prices.
The Saudi Minister said that secondary sources suggest OPEC production in December was already more than 600,000 barrels per day lower than in November.
“We in Saudi Arabia went beyond our commitment and have lowered both production and exports,” Falih noted.
He later told reporters that he sees no need for an extraordinary OPEC meeting before April, when the group is set to decide its output policy for the rest of 2019.
He also pointed out that the US Shale oil will not lead to a permanent recession in the market, and that Saudi Arabia will maintain its policy of keeping sufficient oil reserves to stabilize the market.
Falih said oil demand remains strong, explaining that narrowing the range of volatility is what should be done.
On the other hand, Falih said that Saudi Aramco could issue a $10bn bond to fund its pending acquisition of a controlling stake in Saudi petrochemicals giant SABIC.
“The bond issue is intended to give Aramco multiple sources of capital.”
“With or without the SABIC transaction a company the size of Aramco--its capital program and its capital spend is going to be from $40bn to $50bn a year--it’s very prudent they have access to the capital market.”
