Tokyo — Saudi Arabia is "absolutely" confident OPEC and non-OPEC partners will reach an agreement to extend an oil production deal that expires this month, energy minister Khalid al-Falih said Monday in Tokyo.
Falih told reporters he had "very constructive discussions" with Russian energy minister Alexander Novak during trips to Saint Petersburg and Moscow just before he traveled to Japan for the G20 energy meeting over the weekend.
"Our intent is to make sure that we continue to work together closely, not just bilaterally, but with all other members of the OPEC+ coalition -- and that the good work we have done over the last two and a half years continues to the second half of 2019, maintaining supply constraints to bring balance to the global inventories of oil," Falih told reporters after the Saudi-Japan Vision 2030 Business Forum in Tokyo.
OPEC and 10 non-OPEC partners, led by Russia, agreed in December to cut a combined 1.2 million b/d of production in the first half of 2019.
Saudi Arabia's June and July crude production will be at similar levels as the past few months, Falih said, "to bring inventories back to where they belong".
"I hope that will continue in [H2 2019] with assurances I have received from all the other OPEC+ countries that they will maintain the agreement going into the second half."
EARLY JULY OPEC MEETING
All OPEC members except one have agreed to delay the group's June 25-26 meeting to the first week of July, after the G20 leaders' summit in Osaka, Japan on June 28-29, Falih said.
"We hope that they will come along and we will have a date confirmed in the next couple of days," Falih said on the lone holdout. "But I am personally committed to making sure that we do meet and that we have a consensus, which has already been informally developing."
Falih expanded on his comments over the weekend about recent oil tanker attacks near the Strait of Hormuz damaging global confidence in oil security. He said Monday that Saudi Arabia was "doing all that is necessary to ensure safe passage" of oil shipments.
"But this is not just an attack on Saudi Arabia or regional countries," he said. "This is an attack that touches global economic stability. Oil remains to be, and will be for many decades, the lifeblood of the global economy, certainly of the industrial world... Many of the Asian economies rely on continuous, uninterrupted supply of oil and gas coming from our region."
SENTIMENT STOKING DEMAND ANXIETY
Asked about the potential for trade conflicts to trigger an economic downturn and slow oil demand, Falih said the demand concerns that have been pressuring oil prices were based on sentiment not fundamentals.
"From physical demand on oil, I have to say we are not seeing a slowdown from either China, the US, India or other developed economies," he said. "The impact so far has been on the sentiment side and fear rather than actual impact.
"We are hopeful that there will be a resolution of this trade dispute between the world's two largest economies and that it will calm down these anxieties that have impacted not only oil markets but equity markets and other capital markets around the world."
Falih expected global oil demand of 100 million b/d this year and 120 million b/d in 20 years.
--Takeo Kumagai, Meghan Gordon, firstname.lastname@example.org
--Edited by Daniel Lalor, email@example.com