Saudi Energy Minister Khalid al-Falih said on Monday he was concerned about possible shortages of spare crude oil output capacity, although he believes the market is in better shape after the OPEC-led production cuts that started in 2016.
Oil prices have surged as the output cut agreement by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, has held. The main global oil benchmarks on Monday hit their highest since late 2014.
The recent upswing in prices, which has nearly tripled crude values from lows hit in early 2016, has led to speculation that the output curbs will soon be lifted as countries reliant on oil revenue seek to boost their coffers by raising their exports.
“We are concerned about tight spare capacity nowadays... But we feel the industry is in better shape than when we started in 2016. And although we are seeing that improvement, we certainly don’t feel we are where we need to be with complete market stability,” Falih told Reuters in Tokyo.
Spare output capacity will be among the topics discussed when OPEC and non-OPEC energy and oil ministers meet next month in Vienna, he added.
Falih stressed that Saudi Arabia is not targeting a specific price for oil. “For sure we are not targeting a price. Our objective all along has been to bring stability, re-balancing and equilibrium back to the oil markets,” he said.
Nor was the aim to get storage levels back to the five-year average, “certainly not the rolling five-year average, because the rolling five-year average has been inflated by the glut that’s been around since 2014,” Falih further noted.
Meanwhile, Russian Energy Minister Alexander Novak said Russia was committed to reaching full compliance with a global agreement led by the OPEC to reduce oil production in May.
Russian oil production stood at 10.97 million bpd in April, unchanged from the 11-month high in March, surpassing the target under the deal with other oil producers.
Falih met with Japanese Foreign Minister Taro Kono and discussed with him the Saudi Arabia-Japan Vision 2030 and means of developing and enhancing bilateral cooperation.
He also pointed out that the Kingdom regards Japan as its main strategic partner. “Japan will continue to receive the highest commitment on our part,” he told Japanese Trade Minister Hiroshige Seko.
Saudi Energy Minister and Masayoshi Sun, chairman of Softbank, also met to discuss renewable energy projects in Saudi Arabia and ways to develop cooperation in this field.
