Vienna — OPEC and its 10 non-OPEC partners need to produce more oil to meet demandin the second half of the year, Saudi energy minister Khalid al-Falih saidThursday, pressing the case for the coalition to ease its output quotas.
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But how any production increase would be divvied up between the countrieshad yet to be decided, he said.
"The market needs more oil than is currently being produced by these 24countries," Falih told reporters in Vienna, where the coalition is gatheringfor talks on the deal. "Ultimately, we will meet the needs of the market.Consumers are asking for more supply in the second half."
But he added that OPEC would take into account every country's situationin building a consensus on output policy.
"We have to be sensitive to all member countries and listen to theirdesires," he said. "Some have said, 'We can't produce and don't increase ourproduction limit,' so I think we just have to wait and listen and come up witha decision that satisfies all stakeholders."
OPEC produced 31.90 million b/d in May, according to the latest S&PGlobal Platts OPEC survey. That's about 840,000 b/d below its ceiling ofaround 32.74 million b/d, when every country's quota is added up.
But Falih said OPEC producing collectively at its full compliance levelwas not a viable solution.
"Some of the extra conformity that we have seen by producers isinvoluntary," Falih said during a panel session at the OPEC Seminar."Reallocating [allocations] to other countries like Saudi Arabia may be atechnical solution, but it may not be politically agreeable to others."
OPEC will decide Friday on the future of the production cut agreement,with Saudi Arabia and non-OPEC Russia pushing for rolling back the supplycaps.
Russia has proposed a 1.5 million b/d increase, but Iran, Iraq andVenezuela have said they are adamantly against any lifting of the quotas.
Iran is facing US sanctions on its oil sector that go into effect inNovember, while Venezuela's oil production has been reeling from a severeeconomic and political crisis.
Later Thursday, Falih will chair a meeting of the six-countryOPEC/non-OPEC monitoring committee overseeing the cuts, which also includesRussia, Kuwait, Venezuela, Algeria and Oman.
Iran and Iraq have been invited.
Falih said any raising of output would be measured.
"We will not allow the glut to materialize again," he said at the OPECSeminar. "That is not in the interest of consumers or producers. But atthe same time, we are not going to allow short-term fears to be realizedthat the market will be squeezed."
--Edited by Jonathan Dart, firstname.lastname@example.org