Talking to reporters before the January 21 meeting of the joint ministerial committee, Saudi Energy Minister Khalid al-Falih urged oil-producing countries to maintain their cooperation beyond the expiry of the current deal at the end of 2018.
Al-Falih indicated the importance of demonstrating the ongoing commitment of oil producers but also pointed out that any new framework does not need to replicate the current deal. He said:
“This doesn’t necessarily mean sticking barrel by barrel to the same limits or cuts, or production targets country by country that we signed up to in 2016, but assuring stakeholders, investors, consumers and the global community that this is something that is here to stay. And we are going to work together.”
Al-Falih also said he expected the oil market to become balanced again in 2018, thanks to stronger demand driven by global economic growth and the effect that the OPEC-led supply cuts have had on reducing inventories. The price of Brent crude has risen to a three-year high of around $70 recently, and together with his counterparts from Oman and the UAE, Al-Falih suggested the higher price may trigger greater production from US shale operators like ExxonMobil, which also makes industrial lubricants for Mobil UK distributors.
While the current OPEC-led agreement is scheduled to last throughout 2018, it may be ended or wound down earlier if the market shows signs of overheating. OPEC and its nonmember partners, such as Russia, are set to examine oil policy next at a meeting in June.