Saudi Arabia’s energy minister said on Sunday that extending the current agreement on global oil supply cuts until March next year, and adding one or two small producers to the pact, should be enough to reduce oil inventories.
“We believe that continuation with the same level of cuts, plus eventually adding one or two small producers … will be more than adequate to bring the five-year balance to where they need to be by the end of the first quarter 2018,” Khalid al-Falih told a news conference in Riyadh.
OPEC’s aim is to reduce global oil inventories to the industry’s five-year average.
The Organization of the Petroleum Exporting Countries, Russia and other producers originally agreed to cut production by 1.8 million barrels per day (bpd) for six months from Jan. 1.
Oil prices have gained support from reduced output, but high inventories and rising supply from producers not participating in the accord, such as the United States, have limited the rally, pressing the case for extending the curbs.
Saudi Arabia and non-OPEC member Russia, the world’s top two oil producers, have agreed on the need to prolong the current deal on cuts, which expires in June, until March 2018.
An OPEC panel reviewing scenarios for the oil producer group’s meeting last week looked at the option of deepening and extending the agreement to reduce crude output, in an attempt to drain inventories and support prices.
The panel, the Economic Commission Board (ECB), does not set policy and its meeting precedes the gathering of OPEC and non-OPEC oil ministers on May 25 to decide whether to extend beyond June 30 their deal to reduce output.
The size of the extra supply cut being mulled by the ECB was not immediately available. OPEC sources have said that while a larger cut by existing participants was considered unlikely, one could still be debated and the size of the supply reduction could increase from 1.8 million bpd if more non-OPEC countries come into the deal.
OPEC has been urging other producers to join the supply pact and, together with participating non-member countries, meets to set policy on May 25 in Vienna. Turkmenistan, along with Egypt and the Ivory Coast, are due to attend the meeting on Thursday, sources have said.