‘If Russia & Saudi Arabia lead, rest will follow’: Saudi energy minister on historic oil deal
The Saturday meeting of the members of the Organization of Petroleum Exporting Countries (OPEC) with 12 oil exporting countries outside the group “is significant because [it] has brought so many countries together for the first time,” Al-Falih said.
Al-Falih stressed that the total volume of oil produced by the countries that attended the meeting is close to 53 million barrels per day out of a total of roughly 90, so their share in the world’s oil production approaches 60 percent. He went on to say that the share of the countries that took part in the negotiations in Vienna on Saturday is even greater in the total volume of oil that is traded because “oil produced by the countries that were not represented at today’s meeting is mostly consumed within the countries that produce it.”
The minister welcomed the agreement on the oil production reduction and hailed Russia’s commitment to the deal.
“This meeting gave us understanding that we are all in the same boat, we all benefit [from being] together while [our attempts] to take advantage of each other” eventually hurt the market, he said, adding that this agreement showed that the OPEC and non-OPEC countries “were able to build trust.”
He then stressed that the parties to the agreement have to reinforce this mutual trust by ensuring the maximum compliance with the agreement and expressed his hope that Russia will take one of the leading roles in this process.
Al-Falih particularly said that he trusts the word of the Russian Economy Minister Aleksandr Novak and expressed confidence that Russia will comply with the terms of the deal.
“If Russia and Saudi Arabia lead, the rest will follow,” he stressed.
He then said that he “does not expect the US government to react to this in any way” to the Saturday deal as it has “not reacted in the past and let the market respond.”
At the same time, Al-Falih expects oil producers in the US to “respond to the higher prices and more stability” which will result in “healthy” development. Saudi Arabia welcomes the development of the oil industry in the US, as it “has been a center of innovation” and provided “new cost-efficient technologies”, so the Saudis want it to be “competitive and healthy.”
On Saturday, twelve non-OPEC countries, including Azerbaijan, Oman, Mexico, Sudan, South Sudan, Bahrain, Malaysia, Equatorial Guinea, Bolivia, Kazakhstan and Russia, agreed to cut oil production by 558,000 barrels per day (b/d) under the deal with the OPEC members.
OPEC members also confirmed their commitment to the plan to reduce the oil supply by 1.2 million b/d. This, together with the commitments made by non-OPEC states, would lead to the total reduction of oil production by about 1.7-1.8 million b/d, Russian Energy Minister Aleksandr Novak said at the press conference.
The commitments taken by both OPEC and non-OPEC countries put an end to the ’pump-at-will’ policy the group has conducted since 2014, which sent oil prices down from $100 to less than $50 a barrel. Now, both OPEC and non-OPEC oil exporters are trying to push prices up.