RIYADH/DOHA, NOVEMBER 17, 2016 – The energy minister for top OPEC exporter Saudi Arabia said on Thursday he was optimistic about OPEC’s deal to limit oil output and mentioned the lower end of a previously agreed production target, helping spur a rally in the price of crude.
The Organization of the Petroleum Exporting Countries, at a meeting in Algeria in September, made a preliminary deal to limit oil output. The details are meant to be finalised when OPEC ministers gather in Vienna on Nov. 30.
Saudi Energy Minister Khalid al-Falih, speaking to Saudi-owned Al-Arabiya TV, said the oil market was on a path towards becoming balanced and that “reaching (a decision) to activate that ceiling of 32.5 million barrels per day (bpd) will speed up the (market) recovery and will benefit producers and consumers”.
OPEC agreed on Sept. 28 to limit supply to between 32.5 million and 33 million bpd, with special conditions given to Libya, Nigeria and Iran, whose output has been hit by wars or sanctions.
Falih and other ministers have said previously that OPEC would reduce output to that range, without specifying the higher or lower end.
Oil prices climbed above $47 a barrel on Thursday as comments from Falih and other ministers boosted expectations that OPEC would complete the deal.
“I’m still optimistic that the consensus reached in Algeria for capping production will translate, God willing, into caps on states’ levels and fair and balanced cuts among countries,” Falih said.
Algeria’s Energy Minister Nouredine Bouterfa said the issue of Iran’s production would not undermine a deal.
“There is strong consensus among OPEC producers for a freeze,” he told Reuters.
“Iran is not a problem. Iran is a particular situation and needs particular treatment. They will not have the same rule for the reduction. We will study what the best solution is for Iran.”
Qatar’s Energy Minister Mohammed al-Sada said Iran and Iraq – which has also sought special treatment in any supply cut – were being asked to freeze output at current levels.
“We are discussing with both countries on that and we are looking at various ways and means of coming to a mutual understanding,” Sada told reporters.
Non-OPEC exporter Russia is ready to support OPEC’s decision on an output freeze and sees a good chance that it can agree terms by Nov. 30, Russian Energy Minister Alexander Novak said on Wednesday.
Falih told Al-Arabiya that he hoped an agreement with Russia to cooperate on market stability would correspond with OPEC’s meeting on Nov. 30.