Saudi Energy Minister Khalid al-Falih said on Wednesday that OPEC and its partners were “taking it easy”, in response to a tweet from US President Donald Trump requesting that oil producers relax their efforts to boost oil prices.
“The 25 countries are taking a very slow and measured approach. Just as the second half of last year proved, we are interested in market stability first and foremost,” Falih said in Riyadh when asked to comment on Trump’s tweet, footage on television channel CNBC showed.
Trump, in the latest in a series of tweets about oil prices since April 2018, wrote on Monday: “Oil prices getting too high. OPEC, please relax and take it easy. The World cannot take a price hike – fragile!”
The Organization of the Petroleum Exporting Countries and its allies increased production significantly last year ahead of a potential decline in supply that did not materialise, Falih said, and oil inventories ballooned as a result.
“Therefore we corrected course in a gradual and measured way to bring inventories to a reasonable level,” said Falih, whose country effectively leads OPEC, adding that US production continued to grow.
“We are taking it easy,” Falih added.
Following Trump’s Monday tweet, oil prices registered their largest daily percentage drop this year, with Brent crude losing 3.5 per cent that day. Brent edged up on Wednesday.
OPEC Secretary General Mohammad Barkindo, also in Riyadh for a conference, said Trump was welcome to join a dialogue on balancing supply and demand in the oil market.
The United States, as the world’s biggest oil producer, has a strategic stake in the matter, Barkindo said.
OPEC and its allies, a grouping known as OPEC+, will meet in April to decide output policy. They agreed in December to reduce supply by 1.2 million barrels per day from Jan. 1 for six months.
Falih said current analysis indicated OPEC+ may need to extend until the end of 2019 its agreement to curb output.
“We are only in February, so it is difficult for me to predict where we will be in June when the current interim agreement runs out,” Falih said.
“All the outlooks that I have seen tell us that we will need to continue to moderate production in the second half of this year, but you never know,” he added.
“Those forecasts are based on certain assumptions about the continuation of supply from countries like Libya, like Venezuela, like Iran and there is a great deal of uncertainty and lack of transparency about the barrels coming from those countries.”
Falih said OPEC+ was “on course” with implementing the supply reduction, and that the oil market was responding “gradually but surely”.
“We just need to give it time. We will see demand picking up nicely from the second quarter onwards, we will see better compliance and conformity from the member countries and inventories will respond in due course,” he said.
“I think the market will be assured that we are committed to balance the market as we have always said.”
On Tuesday, a Gulf OPEC source said OPEC and its allies would stick with their agreement to reduce oil supply and were likely to keep cutting until the end of the year.