Opec likely to stay the course on output cuts as inventories remain high
The UAE and Saudi Arabia pledged to fill supply gaps if needed, but said such action was not necessary, Jennifer Gnana reports from Jeddah, Saudi Arabia
Opec and its allies are likely to stay the course on production cuts until the group's meeting in Vienna next month, the UAE and Saudi Arabia's energy ministers said, as the group convenes in Jeddah to review its ongoing output pact.
Key oil producers say high inventory levels for crude, primarily due to rising US production, will not necessitate a further supply boost in the markets, according to the UAE and Saudi energy ministers.
UAE energy minister Suhail Al Mazrouei told reporters in Jeddah that supply gaps would be filled by the alliance if needed but such a course of action would not be required as “inventories were building up”.
Saudi Arabia and Russia have led the Opec+ alliance to slash 1.2 million barrels per day since the beginning of the year. The cancellation of US waivers to Iran’s oil buyers as well as the loss of production in Opec producers Libya and Venezuela have caused prices to rally due to possible tightening of supply.
Saudi energy minister Khalid Al Falih said in an interview with Reuters that he saw no shortage in the market.
“I am not sure there is a supply shortage, but we will look at the [market] analysis. We will definitely be responsive and the market will be supplied,” he said on Saturday.
“Inventories are still rising. We saw the data from the US week after week, and they are massive increases, so there is obviously supply abundance,” he added.
The UAE and Saudi Arabia have come under pressure by the US following the cancellation of exemptions to eight of Tehran’s buyers to boost supply, as almost a million barrels of Iranian crude could leave the market.
Benchmark Brent rose by a dollar last week following two separate attacks - on four oil tankers offshore the UAE emirate of Fujairah as well as armed drone strikes against an east-west pipeline in Saudi Arabia.
Mr Al Falih had denounced the attacks in the kingdom as acts of terrorism against global oil supply, but said the country’s supplies had not been impacted.
Updated: May 20, 2019 12:27 AM