Vienna — OPEC is "converging towards a good, positive decision" on raising outputlevels, Saudi energy minister Khalid al-Falih said Tuesday, after meeting withseveral counterparts in Vienna -- though notably not with Iran's BijanZanganeh, who is opposed to rolling back quotas.
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"Every minister that I have met with agrees that it's time for us to changecourse and respond to the market," Falih said.
"Market fundamentals have shifted, and it's a reality that the market demandsmore in the second half than what has been provided in the first half."
OPEC will decide Friday on the future of its 1.8 million b/d supply cutagreement with 10 non-OPEC partners, led by Russia.
Russia has proposed easing quotas by as much as 1.5 million b/d.
Saudi Arabia reportedly wants a smaller amount, perhaps between 300,000 b/dand 600,000 b/d, to fill any supply gap left by Venezuela's continued declineand US sanctions on Iran, as well as to ease concerns from US President DonaldTrump, a key ally, on high oil prices.
Falih said how any output increase would be distributed is yet to bedetermined. But he added that he was confident a consensus would emerge byFriday's meeting.
"The exact amount, the timing, the manner, the distribution, we have a coupleof days to discuss and we're going to do our best efforts to maintain theconsensus that have characterized the last couple of years," Falih said.
Zanganeh, however, has said he sees the market balanced, blaming the recentrise in prices on Trump's decision to impose sanctions on Iran and Venezuela.
"The main reason behind the current high oil price is not mainly lack ofbalance between supply and demand," Zanganeh said in prepared remarksWednesday to the OPEC Seminar. "On the contrary, the political tension createdby the US administration has given rise to market instability and uncertainty,worrying consumers and causing price hikes."
Falih acknowledged that politics were a factor in OPEC's thorny discussions onthe future of its 1.8 million b/d supply cut agreement with 10 non-OPECpartners, led by Russia.
But he said any decision taken at OPEC's meeting Friday would be based onsupply and demand fundamentals.
"I think I'd be lying to you if I didn't say and acknowledge that there arepolitical forces -- oil has always been influenced by politics," Falih said."It is a critical commodity to global economic growth. There are internalforces within many countries, both producers and consumers that push for thosepolicies to go one way or another."
He added that OPEC was holding a workshop on what metrics to use to determinewhether the market has rebalanced.
The OPEC/non-OPEC coalition has been using the five-year average of OECDcommercial inventories as its benchmark.
By OPEC's own analysis, inventory levels are now below the five-year average.
"We've said all along that we should not be making policy decisions on thiscomplex market based on one metric alone," Falih said. "So we will look atthis metrics including forward cover of demand going forward, includingexpectations of where demand is going to be in the second half of 2019."
-- Staff, email@example.com
-- Edited by James Leech, firstname.lastname@example.org