LONDON: Saudi Arabia’s energy minister said on Sunday that an agreement to cut oil output had helped stabilize the market, as Russian President Vladimir Putin signaled the deal will be extended.
Khalid Al-Falih, on a visit Bogota, met with Maria Fernanda Suarez, Columbia’s minister of energy, where the two discussed ways to strengthen cooperation in the field of energy.
An agreement to cut oil production by some 1.8 million barrels per day — struck in late 2016 by OPEC and other world producers led by Russia — is paying dividends, Al-Falih tweeted.
“I explained to (Suarez) the results of the OPEC+ agreement on the stability of oil markets, which serves the interests of producers, consumers and investors and supports the global economy,” he wrote.
التقيت اليوم في بوغوتا بمعالي ماريا فرنندا سواريز، وزيرة الطاقة والمعادن في كولومبيا، وناقشنا سبل تعزيز العلاقات الاقتصادية، بالذات في مجال الطاقة، وأوضحت لها نتائج اتفاقية التعاون أوبك+على استقرار أسواق النفط،مما يخدم مصالح المنتجين والمستهلكين والمستثمرين ويدعم الاقتصاد العالمي pic.twitter.com/iTzGjswUY7
— خالد الفالح|Khalid Al Falih (@Khalid_AlFalih) December 2, 2018
The confirmation about the effectiveness of the OPEC+ deal, which helped bolster oil prices after the slump that began in 2014, came as Putin said Saturday that Russia and Saudi Arabia had agreed to renew the pact.
Putin said the world’s two biggest exporters of crude “have agreed to extend our agreement,” AFP reported, although there was no immediate confirmation from Riyadh.
“We are going to work together with Saudi Arabia,” Putin said at the recent G20 summit in Buenos Aires. “We are going to survey together the market situation with Saudi Arabia and respond to it operationally.”
Putin said he had no concrete figures on the extent of the future output cuts.
“Yes, we have an agreement to prolong our accords,” Putin was reported as saying by Reuters. “There is no final deal on volumes but we together with Saudi Arabia will do it. And whatever is the final figure, we agreed to monitor the market situation and react to it quickly.”
Expectation has been rife that the deal would be renewed as OPEC prepares to meet this week in Vienna.
The cuts in production helped oil prices climb to four-year highs in October, but they have subsequently slumped by some 30 percent amid worries about falling demand and a slowing world economy.
John Sfakianakis, chief economist at the Gulf Research Center, based in Saudi Arabia, said that a renewal of the deal would be healthy for global markets.
“It’s hard to predict where oil prices will go from here but they have been heavily oversold,” he said.
“Markets are expecting for the OPEC+ deal to be renewed, which should be healthy for consumers and producers and the global economy as a whole. Moreover, demand-driven worries due to trade wars might subside, which should help lessen global growth concerns in the short term.”
