Al-Falih сonsiders that the OPEC does not have to strictly limit the production
Khalid Al-Falih, Minister of Energy of Saudi Arabia, which is the largest producer of the OPEC, made a statement on Monday that the cartel should not assign strict quotas on oil production. He also gave an optimistic assessment of the prospects of reaching an agreement on the limitation of the volume at the summit in November. In his speech at the Istanbul International Energy Congress Minister Al-Falih said that he continued to believe in the importance of the OPEC cartel role in the world. The minister believes that the organization, whose members agreed to reduce the production of raw materials at the Algerian meeting in September, should be careful and ought not to forget about the responsibility. In particular, Al-Falih said: “Members of the OPEC must be careful and not limit the production too strictly in order to avoid shock in the market. We will responsibly consider this point.”
“Prices (for stocks) have dropped too low, which has struck on investments. Many companies and countries are facing economic difficulties … We do not want to give the market a false signal and thereby provoke a price shock”, – the minister said. In addition, Al-Falih said that soon he would meet with the Russian Energy Minister Alexander Novak in order to discuss the Russian Federation’s position regarding the Algerian agreements of the OPEC countries. The meeting of the technical committee between participants of the OPEC and producing countries outside the cartel will be held in 2 weeks. Cartel holds a lot of meetings in order to agree on the details of the Algerian Pact on reducing the crude production volumes.
All this suggest that the OPEC organization is serious in the fight against the excess of supply in the market and the stimulation of the oil price increase. Meanwhile, the OPEC sources doubt the fact that the cartel in Istanbul will come to the common decision. Most likely, further activities after the agreement in Algeria will be discussed during the meeting.
Al-Falih said: “It is time to change the strategy .Today the market is not the same that in 2014. This is a very mild measure, we do not offer something radical. The difference is that the balance of forces in the market has changed significantly compared to 2014.“ Currently, according to the Saudi minister, the situation is not quite clear regarding the supply and demand in China and North America. The Minister expressed the hope that the situation will have become clearer by the OPEC summit in Vienna in November.
On Friday the Ministry of Energy reported that Alexander Novak was planning to reach an agreement on oil freezing before the summit in November. According to al-Falih, Saudi Kingdom is ready to any oil quotations. The Minister said: “We have budgeted very low and reasonable prices.”