Supply risks abound from Iran to Venezuela to Libya and the peak summer oil demand season is just around the corner, but Saudi energy minister Khalid al-Falih still sees a world awash in crude. In case anyone doubted Saudi Arabia’s resolve to maintain price-boosting production discipline, when many forecasters are warning of a potential supply squeeze ahead and US President Donald Trump is pressuring the kingdom to open the taps, Falih could not have been more clear Sunday.
“We see inventories rising, we see plentiful supplies,” the minister told reporters in Jeddah, Saudi Arabia, where an OPEC/non-OPEC monitoring committee that he co-chairs with Russian counterpart Alexander Novak met to debate how much to pump going forward. “All in all we should be in a comfortable situation in the weeks to months to come,” Falih added.
So comfortable, in fact, that he said the OPEC kingpin will keep its crude production in May and June at around 9.7 million to 9.8 million b/d. That is more than half a million b/d below its quota under an OPEC/non-OPEC supply accord of 10.31 million b/d. Saudi crude exports would not surpass 7 million b/d in either month, he added.
Even if the deal is not extended beyond its June expiry when the producer coalition meets in five weeks in Vienna, the minister declared that Saudi Arabia will still hold to its quota for at least an extra month — boldly risking its own market share in the name of price support.