Oil cuts by Opec, allies on right track to balance the market: Saudi

Energy Minister Al-Falih says group ready to do more if needed

Saudi Arabia’s energy minister is confident OPEC and allied suppliers have made the correct oil-output curbs to remove a glut and that the coalition will stick together in case further adjustments are needed.

“If we look beyond the noise of weekly data and vibration in the market, I remain convinced we are in the right track,” Khalid Al-Falih said at a conference in Abu Dhabi. If more needs to be done for oil, “we will do it.”

The Organization of Petroleum Exporting Countries, led by Saudi Arabia, agreed to cut oil output this year to support prices. The group and its allies, known collectively as OPEC+, said they would start to trim 1.2 million barrels of daily production this month to stabilize the market. Producers already reduced output by 600,000 barrels a day in December, Al-Falih said last week.

Prices are up more than 20 percent since hitting an almost two-year low in December. The increase is widely considered a boon to U.S. shale producers, but Al-Falih isn’t convinced that the frackers will “sustainability suppress the market.”

Even as it pumps less oil, Saudi Arabia is still investing to maintain or increase capacity. The kingdom last week raised its estimate for crude reserves after its first independent audit in nearly four decades. The reserves assessment will be part of Saudi Arabian Oil Co.’s approach to international investors as the world’s biggest crude-exporting company prepares to sell a bond this year and offer its shares to the public in 2021.