London — Saudi Arabia's energy minister Khalid al-Falih is confident the OPEC alliance will "do what is needed to sustain market stability beyond June," signaling the 24-member oil exporters coalition may continue its policy of production cuts amid global economic concerns and volatile crude oil prices.
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The coalition's 1.2 million b/d output reduction deal is up for review at the end of the month, but the date for the next OPEC/non-OPEC meeting to decide whether to roll over the agreement is still up in the air.
Falih talked up the persistent need to rebalance the market, telling Arab News in an interview published Monday "that means drawing down inventories from the currently elevated levels."
Oil stocks have presented a mixed picture to the market. The International Energy Agency noted in May that there were signs of market tightness, with stocks having fallen for a second straight month, and counterseasonally, in March, while the backwardation in oil prices steepened.
"Total stocks were 2.2 million barrels below the five-year average at end-month. Stocks in days of forward demand declined to 59.8 days, the lowest since July 2018," it said.
Falih played down the current oil price move, which saw Brent crude tumble more than 3% on Friday amid global trade tensions and macroeconomic worries. Brent crude hit a peak of $75/b in late April on the back of tightening supplies but was trading at $62.31/b at 1000 GMT Monday, with demand considerations having come into focus.
"We do not target specific prices... Prices are determined by the dynamic interaction of multiple forces, some of which are not even fundamental -- such as geopolitical headlines and financial speculation," Falih said.
He added that "increasing trade friction and potential barriers would certainly have a negative impact on the global economy and oil demand growth. But the direction of the negotiations is hard to predict."