Khalid al-Falih, the oil minister for Saudi Arabia, has commented that he hopes to see OPEC production curbs relaxed in 2019 after the current deal expires, although he stressed the need for a more permanent framework in future to preserve stability in the oil markets.
While the current deal is set to expire at the end of this year, when it was last renewed, some scope was included to relax the production caps earlier if the situation demands. The minister’s comments would appear to cast doubt on this happening this year.
OPEC’s production curbs have had some success in reducing global inventories, but progress has been slowed by production increases from non-participating countries. The International Energy Agency (IEA) recently pointed to the resurgent US shale industry as the greatest threat, where efficient shale operators—including ExxonMobil, which also makes lubricants for Mobil stockists—are free to pump as much oil as they want. Falih, however, expressed the opinion that declining production in Venezuela and Mexico had offset rising US shale production.
Falih also expressed OPEC’s commitment to building on the current deal’s success by setting up some kind of framework to guide the markets in future and prevent crashes. He said:
“I think everybody has learnt, producers as well as consumers, that a market without a steering wheel is very destructive, very damaging to the interests of all.”
He added that such a framework would enable OPEN and non-OPEC producers to come together and make quick decisions in response to changing market conditions.