“Market fundamentals, in terms of supply and demand, have begun to improve”
October 26, 2016: Speaking at the World Energy Congress in Istanbul, Turkey, Saudi Arabia’s Energy Minister Khalid al-Falih said that as market fundamentals improve, the current down cycle of crude prices is close to an end.
Oil prices are currently hovering around $50 per barrel after hitting a 10-year low of less than $30 in January, after having fallen from a peak of over $100 in mid-2014.
“The current down cycle is nearing an end,” Falih told a joint press conference with his Russian counterpart Alexander Novak after a Gulf ministerial meeting in Riyadh. “Market fundamentals, in terms of supply and demand, have begun to improve.”
Qatar’s energy minister Mohammed al-Sada, whose country holds the rotating presidency of the OPEC oil exporting cartel, also said the ‘difficult phase is over’. Further, he added, “Although the market is heading to being balanced, it needs our joint effort, and we all agreed that we need to take measures to bring back this balance.”
Views now closer to those of Russia
Al-Falih stated that the points of view of Saudi and Russia – the world’s leading oil producer – on the need to stabilise the market ‘are getting closer’.
“Saudi Arabia has started to play an important role of coordinating between Russia, and OPEC, specifically the Gulf countries,” Falih said at a news conference in Riyadh with his counterparts from Russia and Qatar.
“We have managed today, through a common meeting, to reach a common notion to what we can reach in November,” Falih said, referring to an OPEC meeting to be held in Vienna on November 30, when the group is set to finalise an agreement on a cut in production.
OPEC has invited Russia and key non-members to a meeting later in October as the cartel and Moscow seek to tighten cooperation to boost historically low crude prices.
Russia: Deal to depend on OPEC accord
Novak said that Russia’s production level in any accord to shore up prices would depend on the agreement OPEC members reached between themselves beforehand, and on Moscow’s discussions with the exporter group.
“I would like to stress once again that we are not ready to give figures because consultations are continuing and the levels would be dependent on the final agreement of OPEC and the result of our OPEC negotiations,” he told reporters in Riyadh after talks with his counterparts from Saudi Arabia and Qatar.
When asked whether Russia would freeze production at current level or cut below them, Novak replied, “We are looking at a number of options. I don’t want to give the final decision yet but we are considering a few options at the moment.”
Bid to stabilise the market
Earlier, al-Falih said that he had invited Novak to join the meeting of Gulf Arab oil ministers in Riyadh as part of efforts to cooperate with non-OPEC members to stabilise the oil market.
“Russia is one of the world’s biggest oil producers, and is one of the influential parties in the stability of the oil market,” Falih said at the opening session of the ministers of the six-member Gulf Cooperation Council (GCC).
Falih said Novak had welcomed the invitation, “as a clear indication of [a] sincere desire to continue cooperation and coordination with the oil producing and exporting countries for more stability in the market.”