Saudi Arabia’s energy minister Khalid al-Falih has recommended “gently” driving oil inventories down at a time of plentiful global supplies, saying that Opec would not make hasty decisions about output ahead of its June meeting.
“Overall, the market is in a delicate situation,” Mr Falih said before a ministerial panel meeting of top Opec and non-Opec oil producers, including Saudi Arabia and Russia.
While there is concern about supply disruptions, inventories are rising and the market should see a “comfortable supply situation in the weeks and months to come”, he said.
Opec, of which Saudi Arabia is de facto leader, would have more data at its next meeting in late June to help it reach the best decision on output, Mr Falih said.
“It is critical that we don’t make hasty decisions — given the conflicting data, the complexity involved, and the evolving situation,” he said, describing the outlook as “quite foggy” due in part to the trade dispute between the US and China.
Opec, Russia and other non-Opec producers, an alliance known as Opec+, agreed to reduce output by 1.2m barrels per day from January for six months, a deal designed to stop inventories building up and weakening prices.
Russian energy minister Alexander Novak said that different options were available for the output deal, including a rise in production in the second half of the year.
The energy minister of the United Arab Emirates, Suhail al-Mazrouei, said producers were capable of filling any gap in the oil market and that relaxing supply cuts was not “the right decision”.
Mr Mazrouei said the UAE did not want to see a rise in inventories that could lead to a price collapse and that Opec would maintain sustainable market balance.
Saudi Arabia sees no need to boost production quickly now, with oil at around $70 a barrel, as it fears a price crash and a build-up in inventories, Opec sources said, adding that Russia wants to increase supply after June.