Saudi Minister: OPEC Moving To ‘Common Position’ On Oil Output Changes

Members of the Organization of the Petroleum Exporting Countries are due to meet informally in Algeria on the sidelines of the International Energy Forum on September 26-28, and are expected to seek to revive a global output freeze deal.

From 2014 until earlier this year, Saudi Arabia’s then-minister for oil, Ali al-Naimi, offered little verbal support for prices.

“We in the kingdom of Saudi Arabia do not have a targeted number to reach”.

Tehran refused to join a previous attempt this year by OPEC plus non-members such as Russian Federation to stabilise production, and talks collapsed in April.

Prince Mohammed has said he expects the initial public offering (IPO) to value Aramco at at least $2 trillion, but that the figure might end up being higher. Approximately a third of Japan’s ~3.1mn bpd of (slowing shrinking) imports come from Saudi Arabia. “The Saudis indicated that their oil policy is to remain flexible, while they do not see any trouble with current price levels”, writes VTB Capital’s Maxim Korovin. “Their target indeed would be somewhere north of $50 – $60 or so”.

The West Qurna 1 field, developed by Exxon Mobil, and South Oil’s Luhais and Artawi fields contributed most to the increase, according to sources at South Oil.

Crude oil prices rose nearly US$10 a barrel through early August to a high above US$51 two weeks ago on expectations that the big oil producers would take some action to prop up oil prices weighed down by global oversupply. Saudi Arabia has a production capacity of 12.5 million bpd, giving it the ability to boost output in case of any global shortage.

But despite the behind-the-scenes talks, OPEC delegates and industry sources are skeptical that the tone shift will be backed with concrete action either by the Saudis or producers collectively. Some industry sources even predict that Saudi Arabia may have pumped 10.90 million bpd in August.

“The kingdom’s production meets the requirements of the customers, whether they are outside internationally or inside the kingdom”, Al-Falih said. But he did not dismiss the idea of a production freeze.

Goldman Sachs said there was a likelihood of recovery from supply disruptions in Nigeria, Iraq and Libya in the second half of this year that could tilt the oil market back into surplus.

“If there is consensus that emerges between now and the Algiers meeting, Saudi Arabia as always will be a constructive player in these discussions and we will be willing to participate”, he said.