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OPEC action should not shock rebalancing oil market: Saudi energy minister

* Advises caution on market intervention
* Conditions now changed since US shale boom
* Warns on drop in oil and gas investment

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Saudi energy minister Khalid al-Falih said Monday an agreement among OPEC members outlined last month should not shock the market and a "very gentle hand on the wheel" was needed as global supply and demand was already converging.

Speaking at the World Energy Congress in Istanbul, Falih said he was "optimistic" the details of last month's preliminary agreement in Algiers would be pinned down when OPEC holds its regular meeting in Vienna in November.

Several OPEC ministers are expected to meet here this week, with Russian energy minister Alexander Novak also due in Istanbul.

Article Continues below...

Falih reiterated comments earlier in the year that an increase in oil prices to $60/b was "not unthinkable," while insisting that prices were not the over-riding consideration.

However his comments on the need for caution by OPEC may fuel suggestions that Saudi Arabia is reluctant to deviate greatly from the policy it adopted in 2014 of tolerating low prices and seeking to maintain market share.

"OPEC needs to make sure that we don't crimp too tightly and create a shock to the market. We don't want to give the market the opposite signal and shock markets into prices that could be harmful," he said.

Falih added that market conditions had changed since OPEC made its decision in late-2014 not to intervene in the market to support prices -- a time, he said, when booming US shale production was causing a divergence in the market.

"It's a very gentle hand on the wheel and we're not doing anything dramatic, different. I think the market forces have shifted significantly between 2014 and now," he said.

"I spoke in June about the rapidly emerging rebalancing and the fact that I was seeing the convergence of supply and demand, from a very clear [divergence] in 2014, where supply from one region alone, North America, was growing much faster than global demand. OPEC made its decisions not to intervene because there was a long-term structural divergence," he said.

"In June I said that divergence has been reversed and now we're seeing the convergence of supply and demand."

OPEC ministers who gathered in Algiers last month agreed to take action to support low oil prices. Concessions that would allow output to increase in countries such as Iran and Nigeria are expected, but the details are unclear.

But Falih on Monday stressed he was taking account not only of prices and OPEC producers, but of the global supply and demand picture.

"My eyes are not on the price -- my eyes are on supply and demand... I make sure that we collaborate with our colleagues in OPEC and non-OPEC producers our decisions, our signals, so that we balance the interests of all these stake holders and most importantly the interests of the billions of people around the world" who depend on oil, he said.

Falih also reiterated his worries about a drop in investment in oil and gas globally, either due to current low oil prices or factors such as exaggerated expectations of renewable energy or lack of demand.

"I don't want to shrink it to an issue of targeting a single price for the purpose of maximizing the income of Saudi Arabia," he said.

"I am concerned about all the talk about stranded resources, coupled with the view of abundant oil and the low oil prices in recent time pulling away investment that is needed for the continued growth in demand we anticipate.

"To ensure availability of reliable and sufficient supplies of energy during the transition period we all must recognize that we need the continued use and investment in all energy sources, especially oil and gas, which is the core energy source today," he added.

--Staff reports,