Saudi Arabia’s energy minister said global oil supplies were “plentiful” and inventories needed to shrink, signaling the kingdom’s reluctance to rapidly raise production despite escalating geopolitical tensions and the threat of potential disruptions. The comments come as fraught US-Iran relations, attacks on the kingdom’s oil infrastructure and volatile supplies in big producer countries have put energy investors on alert. “The market is in a delicate situation,” said Khalid al-Falih on Sunday ahead of a meeting of oil officials in Jeddah to discuss the effectiveness of a deal between Opec and Russia to curb output by 1.2m barrels a day.
“On the one hand there is a lot of concern, and we acknowledge it, about disruption and sanctions and supply interruptions. But on the other hand, we see inventories rising [and supplies are] plentiful,” Mr Falih said. Mr Falih spoke ahead of a formal ministerial meeting in Vienna next month when officials will decide whether or not to maintain these curbs that have been in place since. January and exceeded expectations. They were originally intended to stop oil stockpiles from swelling and to alleviate a drop in prices. Brent crude, the international oil bench which fell to $51 a barrel in December, has since risen to above $72 a barrel.
But Mr Falih told reporters that oil stockpiles around the world were still rising. “My recommendation to my colleagues will be to drive inventories down,” he said, adding that a final decision would be made in June. “We are not fooled by current prices. We think the market is fragile”, he said later in the day, adding that the kingdom would prefer that producer maintained the cuts policy in the second half of the year. Mr Trump has repeatedly called on Opec and its de facto leader Saudi Arabia to release supplies into the market and keep oil prices in check, as the full impact of US sanctions on Iran’s economy and energy exports is felt.
The kingdom’s production dropped to around 9.7m b/ d in April, which is down around 1m b/d from levels reached at the end of 2018.