Saudi's Falih in Iraq to win support for OPEC oil output cuts

Posted May 24, 2017

The Organization of Petroleum Exporting Countries' second-largest producer, which only reluctantly agreed a year ago to cut output, had previously favored prolonging the supply cuts by just six months.

Oil has climbed as Saudi Arabia and non-OPEC member Russian Federation rally support for a nine-month extension to the output-cut deal by the Organization of Petroleum Exporting Countries and its allies, before this week's meeting in Vienna.

Saudi Energy Minister Khalid al-Falih said he did not expect any opposition within the Organization of the Petroleum Exporting Countries to extending the curbs for a further nine months, speaking after he met his Iraqi counterpart in Baghdad.

Global oil prices eased from one-month highs Tuesday amid reports that President Donald Trump will propose tapping into US crude supplies as part of his budget proposal.

usa light crude was up 12 cents at $51.25.

West Texas Intermediate for July delivery slid as much as 48 cents to $50.65 a barrel on the New York Mercantile Exchange and was at $50.73 a barrel at 8:08 London.

Brent crude futures LCOc1 were trading down 23 cents, or 0.4 percent, at $53.64 per barrel at 0450 GMT.

Prices might continue to be capped despite OPEC's efforts given the robust production in the United States and future production foreshadowed by increasing oil rigs.

At the moment, OPEC's implementation of the oil production curtailment stands at over 100 percent, while non-cartel countries have reached an adherence of over 95 percent, according to Algerian Energy Minister Noureddine Boutarfa.

Iraq's oil minister promised to meet the nation's full commitment in May, Saudi Minister Al-Falih said in an interview on Arabiya television on Tuesday.

Goldman Sachs has already warned of "risks for a renewed surplus later next year if OPEC and Russia's production rises to their expanding capacity and shale grows at an unbridled rate".

Prior to Pradhan's departure for here on Sunday, Petroleum Ministry officials in New Delhi said India's strategy at the OPEC meeting would be to leverage its massive market size for better terms like discounts and longer credit period.

The key is whether stocks are declining, but an extension of the cut can keep oil prices above $50, he added.

OPEC impressed oil traders this year by making nearly all the supply cuts it promised.

"We need to give the market some more time", and the open to prolonging the agreement for six or nine months, he said on sidelines of conference in Abu Dhabi on Tuesday.

Some analysts argue that deeper cuts are required to balance the market, but note the cuts so far have stimulated USA energy companies to boost shale production.

In addition, deeper Opec cuts and higher oil prices could force some consumers to look for alternative suppliers and sources of energy.