ABU DHABI, United Arab Emirates – Saudi Arabia’s oil minister on Thursday suggested that production cuts agreed to by OPEC members and countries outside of the cartel may need to continue to help shore up crude oil prices.
The comments by Khalid al-Falih carry significant weight as the kingdom is one of the world’s top oil producers. They come as the price per barrel stand above $50 and increases in U.S. shale oil production threaten to keep them low.
“There is an initial agreement but it has not been communicated to all the countries yet that we might be forced to extend in order to reach our goal,” al-Falih said in a speech at an oil conference in Abu Dhabi, the capital of the United Arab Emirates.
OPEC agreed in late November to cut its production by 1.2 million barrels a day for six months, its first cut since 2008. Nearly a dozen other countries including Russia pledged in December to cut an additional 558,000 barrels a day.
Crude oil sold for over $100 a barrel in the summer of 2014, before bottoming out below $30 a barrel in January 2016.
Significant wild cards remain, however. President Donald Trump has pledged to free up more oil drilling in the United States. The global economy remains weak as well. Meanwhile, shale oil production has started growing again in the U.S. while Iran rushes to produce as much as it can to make up for years of economic sanctions it suffered over its contested nuclear program.
Talking about shale, Emirati Energy Minister Suhail al-Mazroui said producers involved in the cut made the decision “because we care about the balance in the market.”
“This sacrifice cannot be taken as a sacrifice where someone else can benefit 100 per cent,” he said.