Jan 21, 2018 - Energy & Environment

Saudi oil chief eyes longer-term cooperation with Russia

Putin and King Salman last year in Moscow. Photo: Mikhail Svetlov/Getty Images

Saudi Arabia’s oil minister suggested Sunday that OPEC and non-OPEC producers including Russia should extend cooperation beyond the end of 2018, when their production-cutting deal is slated to expire, according to reports from Oman in Reuters, the Wall Street Journal and elsewhere.

Why it matters: The comments signal that while the deal that took effect in early 2017 has helped to bolster prices that collapsed in 2014 amid a global supply glut, OPEC’s dominant producer believes more collaboration is needed as the cartel and Russia grapple with surging U.S. output, which analysts see surpassing 10 million barrels per day this year.

Quoted: Saudi energy minister Khalid al-Falih, speaking in Oman, said an extension would not necessarily mean simply extending the deal that curbed two-dozen countries joint output by 1.8 million barrels per day, Reuters reports.

  • “This doesn’t necessarily mean sticking barrel by barrel to the same limits or cuts, or production targets country by country that we signed up to in 2016, but assuring stakeholders, investors, consumers and the global community that this is something that is here to stay. And we are going to work together,” he said, according to the news service.

He spoke at a meeting of the Joint Ministerial Monitoring Committee overseeing the deal.

Big picture: Oil prices are currently around their highest level in three years. The International Energy Agency’s said in its latest monthly snapshot last week that “the market is clearly tightening,” and that oil stockpiles in OECD countries declined for the fifth consecutive month in December.

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