Oil producers aim to boost oil output and spare capacity

Oil producers aim to boost oil output and spare capacity

Oil producers aim to boost oil output and spare capacity

/ Policy & Regulations / Thursday, 25 October 2018 10:17

Saudi Energy Minister Khalid al-Falih said the OPEC kingpin was ready to boost its crude production and spare capacity to help maintain a balance in the global oil market.

Speaking at an investment conference in Riyadh, Falih also said OPEC and non-OPEC producers are expected to sign in December an “open-ended” agreement to continue cooperation in the energy markets.

“I don’t rule out that the kingdom's production which has been 9-10 (million barrels per day) over the last decade or so will be a million to two million (barrels) higher," Falih said, without providing a time frame.

Saudi Arabia has already boosted its daily output to well over 10.5 million bpd to meet rising demand in the wake of several production disruptions in other countries.

The kingdom currently holds the biggest spare capacity of around two million barrels which can be utilized when required.

“Investing in the capacity and producing the capacity will continue to be done,” Falih said despite complaining of the high cost of raising and sustaining such capacity.

The Saudi minister expected demand for oil, which currently stands at around 100 million bpd, to rise to 120 million bpd over the next three decades.

Falih also added that around 25 OPEC and non-OPEC producing countries are expected to sign a long-term cooperation agreement in December, following the success of their coordination that helped boost prices.

“What we are hoping to do is to ink an agreement amongst at least the 25 producers that are signatories to the current agreement. Hopefully more countries will join,” he mentioned. “It will become an open-ended agreement to continue to monitor and work together to stabilize the markets. This is the objective of the agreement: monitor and stabilize,” he said.

Falih believes the oil market is “in a good place today in terms of supply and demand balances and inventories” after lifting restrictions on output in June.

OPEC and non-OPEC producers, including the world's top producer Russia, agreed in November 2016 to cut production to deal with huge inventories that sent prices crashing. Since that agreement, oil prices have more than doubled and were currently hovering at just under $80 a barrel.

Falih said the oil producers will continue to monitor supply and demand in the market especially with the Iran sanctions looming and would be ready to act if needed.

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