Saudi Arabia Remains Committed to Cuts

Saudi Arabia Remains Committed to Cuts

Despite positive signs in the oil market, Saudi Arabia remains committed to further drawing down global oil stocks, the Saudi Arabian Energy Minister, Khalid El Falih, said Tuesday, according to Reuters.

Noting that Saudi Arabia is “very flexible,” El Falih noted that the country would “do whatever it takes to bring global inventories down to the normal level,” according to Reuters.

“We have reduced inventories by over 180 million barrels and we still have about 160 million barrels according to numbers I have seen last, El Falih told Reuters.

The minister emphasized that the goal of the cuts is to reduce oil stocks in Organization for Economic Co-operation Development (OECD) countries back to their five-year average, according to Reuters.

Saudi Arabia, as the largest oil producer in OPEC, is party to the production-cut agreement between OPEC and a group of non-OPEC oil producers to reduce crude production by 1.8 million barrels per day (b/d).

The agreement is currently slated to expire in March 2018 but is widely expected to be extended.

The minister also discussed the possibility of a post-agreement framework to prevent rising production from re-flooding the market, according to Reuters.

 “When we get closer to that (five-year average) we will decide how we smoothly exit the current arrangement, maybe go to a different arrangement to keep supply and demand closely balanced so we don’t have a return to higher inventories,” he told Reuters.

Saudi Arabia has announced cuts of 560,000 b/d for November. It is one of the two OPEC members that have fully complied with their production-cut commitments.

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