Saudi Energy Minister Khalid Al Falih said on Wednesday that OPEC and its partners were “taking it easy” in response to a tweet from US President Donald Trump requesting oil producers to relax their efforts to boost oil prices.
“We are taking it easy. The 25 countries are taking a very slow and measured approach. Just as the second half of last year proved, we are interested in market stability first and foremost,” Al Falih said in Riyadh when asked to comment on Trump’s tweet this week, television channel CNBC reported.
“We increased production significantly (last year) ahead of a potential decline in supply which did not materialise and as a result inventories ballooned quickly and therefore we corrected course in a gradual and measured way to bring inventories to a reasonable level,” Al Falih said, adding that US production continues to grow.
Trump, in the latest in a series of tweets about oil prices since April 2018, wrote on Monday: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”
Following the tweet, oil prices registered their largest daily percentage drop this year, with Brent crude losing 3.5 per cent on Monday. Brent edged up on Wednesday.
The OPEC+ alliance will meet in April to decide its output policy, and will gather again in June.
Al Falih said current analysis indicated OPEC and its allies, known as OPEC+, may need to extend their agreement to curb output until the end of 2019.
“We are only in February, so it is difficult for me to predict where we will be in June when the current interim agreement runs out,” Falih said.
“All the outlooks that I have seen tell us that we will need to continue to moderate production in the second half of this year but you never know,” he added.
“Those forecasts are based on certain assumptions about continuation of supply from countries like Libya, like Venezuela, like Iran and there is a great deal of uncertainty and lack of transparency about the barrels coming from those countries.”
The Organisation of the Petroleum Exporting Countries, Russia and other non-OPEC producers agreed in December to reduce supply by 1.2 million barrels per day from January 1 for six months.
Falih also said that the OPEC+ was “on course” with implementing the supply-reduction cuts, and that the oil market was responding “gradually but surely”.
“We just need to give it time, we will see demand picking up nicely from the second quarter onwards, we will see better compliance and conformity from the member countries and inventories will respond in due course,” he said.
“I think the market will be assured that we are committed to balance the market as we have always said.”
On Tuesday, a Gulf OPEC source told Reuters that OPEC and its allies will stick with their agreement to cut oil supply, pushing for more adherence and the producers are likely to continue with the production cuts until the end of the year.