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Saudi Arabia’s crown prince on Saturday said his country supports extending an agreement by major oil producers to limit output beyond next March.
Crown Prince Mohammed bin Salman said that the OPEC-led agreement is necessary to balance supply with demand.
Saudi Arabia is the world’s largest producer and the most influential member of OPEC. The agreement, which kicked in at the start of 2017, also included Russia and other non-OPEC countries.
The Organization of the Petroleum Exporting Countries is expected to take up the agreement at its next meeting on November 30.
In a statement, Prince Mohammed said that Saudi Arabia “affirms its readiness to extend the production cut agreement, which proved its feasibility by re-balancing supply and demand.”
The crown prince affirmed during the October 24-26 Future Investment Initiative (FII) conference in Riyadh that demand for oil will increase in the future, which restored trust to petroleum markets. He said that the future of energy, both conventional and renewable, will be promising, and that the Kingdom will lead both sectors.
The effect of the production limits approved by major oil countries has been muted by rising output from US shale-oil producers. The prince said that high demand for oil has absorbed the increased supply from shale oil.
“The journey toward restoring balance to markets, led by the kingdom, is proving successful despite the challenges,” he said.
On Friday, Brent Crude, the international benchmark oil, rose above 60 US dollars for the first time since 2015 as traders grew increasingly confident that OPEC will continue to limit pumping.
The slump in oil prices that began in mid-2014 has created budget problems for Saudi Arabia and other major producers. Prince Mohammed has laid out a sweeping plan to wean Saudi Arabia off its near total dependence on oil exports.
Jim Krane, an energy expert at Rice University in Houston, said Saudi Arabia needs to keep oil prices up to balance its budget and make the upcoming public sale of stock in Saudi Aramco, the state-owned oil company, attractive to investors.
“Nobody is going to want a piece of Saudi Aramco with oil under 40 US dollars, which is where it would be if OPEC wasn’t choking off supply,” he said.
Krane said OPEC cutbacks and higher prices would help boost US production in Texas and North Dakota.
(AP)
