By Rania El Gamal and Vladimir Soldatkin
JEDDAH, Saudi Arabia (Reuters) – Saudi Arabia's energy minister Khalid al-Falih said on Saturday he saw no shortage of oil supplies as global oil stocks were still increasing, especially in the United States, but OPEC will respond to market needs. .
Speaking in Jeddah ahead of a ministerial panel that will meet on Sunday the main OPEC and non-OPEC producers, including Saudi Arabia and Russia, Falih told Reuters that OPEC will not decide on production until the end of June, when the group should meet later.
"We are definitely receptive and the market will be supplied," Falih said when asked if an increase in production was at the table due. "I am not sure if there is a shortage of supply, but we will analyze the analysis. concerns of lack of oil.
"But all indications are that stocks are still going up. We've seen the US data week after week, and they're massive increases, so obviously there's plenty of supplies."
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers, known as OPEC +, have agreed to reduce production by 1.2 million barrels per day from January 1 for six months, one agreement to hold stocks. accumulating and weakening prices.
"We will be flexible. Let's do the right thing as we always do," Falih said of any decision at the June meeting on continuing reductions.
Falih said that OPEC was guided by two main principles: "One to keep the market moving towards equilibrium, and stocks are back to normal, and two to respond to the needs of the market, we will find the right balance.
Saudi Arabia sees no need to rapidly increase output now with oil prices around $ 70 a barrel as it fears a fall in prices and a build-up of stocks, OPEC sources said. But Russia wants to increase supply after June, when the current OPEC + Pact is due to expire, the sources said.
The United States, on the other hand, which is not a member of OPEC +, but is close allies of Saudi Arabia, wants the group to increase production to reduce oil prices.
Falih needs to find a delicate balance between keeping the oil market well supplied and prices high enough for Riyadh's budgetary needs while pleasing Moscow to ensure Russia remains in the OPEC + pact, responding to the concerns of the United States and rest of the country. OPEC +, the sources said.
The share of cuts in OPEC is 800,000 bpd, but its real reduction is much higher due to production losses in Iran and Venezuela. Both are under US sanctions and exempt from voluntary reductions under the OPEC-led agreement.
US President Donald Trump has called on OPEC and the de facto leader of the group, Saudi Arabia, to lower oil prices.
The ministerial panel meeting on Sunday, known as the JMMC, comes amid concerns of a tight market as Iran's oil exports are expected to fall further in May, and Venezuelan shipments may drop further in the coming weeks due to sanctions.
Oil pollution also forced Russia to halt flows along the Druzhba pipeline – a key channel for crude oil in Eastern Europe and Germany – in April. The suspension, still of unclear duration, left refiners struggling to find supplies.
But stocks unexpectedly rose last week to the highest level since September 2017, while gasoline stocks fell more than expected, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]
Tensions between Saudi Arabia and OPEC member Iran are also on the rise after last week's attacks on two Saudi oil tankers off the United Arab Emirates and one on Saudi oil facilities inside the kingdom.
Saudi Arabia has accused Iran of ordering an attack on the oil pumping stations of state oil giant Saudi Aramco, which the Houthi militia, a Yemen ally, has taken over.
An OPEC and non-OPEC technical committee found that oil producers' compliance with the supply reduction agreement reached 168 percent in April, three sources told Reuters on Saturday.
This shows that OPEC + producers are cutting output by more than their share. Saudi Arabia has pumped below its production target since January to keep oil stocks and prices under control.