Al-Falih, Mazrouei comment on oil supply and OPEC's next steps
Despite geopolitical tensions and production drops from multiple OPEC members, KSA and UAE say inventory build-ups persist
Ahead of an OPEC/non-OPEC ministerial panel in Jeddah, UAE Energy Minister Suhail al-Mazrouei said that production cuts could continue, despite the full reinstatement of US sanctions against Iran. OPEC+, the coalition of OPEC members and allied non-members, agreed in December to cut production by 1.2mn barrels per day starting on 1 Jan for a period of six months.
"The job is not complete," he reportedly said. "We are still seeing some inventory build-ups. We need to attend to it. This is probably a continuation until we see the true balance in the market."
He noted that OPEC+ would take action to offset losses of Iranian supply if market fundamentals justified it. However, no policy changes will be made until the next full OPEC+ meeting in Vienna, in June.
"We are looking at filling any gap from the whole group if there is a need to attend to any shortage in the market," Mazrouei said. "But we don't see it. We see inventories build up, so we need to attend to that first."
Meanwhile, KSA Energy Minister Khalid Al-Falih told Reuters that he did not see supply shortage in the global market. “I am not sure there is a supply shortage, but we will look at the (market) analysis. We will definitely be responsive and the market will be supplied,” Falih said.
"We saw the data from the U.S. week after week, and they are massive increases, so there is obviously supply abundance,” he added. However, Iran and Venezuela, both under US sanctions, have experienced losses, and Libya NOC's head Mustafa Sanalla said that the country could see 95% of its production lost due to conflict.
Meanwhile, attacks targeting oil infrastructure in Saudi Arabia and off the coast of the UAE have heightened tensions in the region. Neither of the attacks disrupted oil supply, according to Saudi Arabia' press agency. Saudi Arabia's ability to ensure a reliable supply of oil and gas is of high importance amidst production drops from other OPEC members. It has a production capacity of 12mbpd.