Saudi Arabia’s energy minister says there’s a chance of another production cut from OPEC countries this year.
Speaking at the World Economic Forum at the Swiss ski resort of Davos, Khalid Al-Falih says he “would not exclude” another cut to follow last year’s December agreement if higher prices don’t stick.
He noted that in the past the OPEC oil cartel has often had to cut production more than once to stabilize the market.
Another option, he says, is that the recently agreed on production cut could be extended further. However, he says oil ministers don’t want to create a shortage too early.
Oil prices are trading over $50 a barrel, nearly double the level they were a year ago.
Earlier Thursday, the International Energy Agency said global oil output is dropping for the first time in months, as Saudi Arabia and other oil-producing countries follow through on pledged cuts aimed at lifting oil prices.
The IEA’s monthly report says Thursday that OPEC production dropped to 33.09 million barrels a day in December from 34.2 million the previous month.
The first such drop in seven months, it’s attributed to lower Saudi output and disruptions in Nigeria, though production from nations outside OPEC also fell.
However, the IEA’s executive director, Fatih Birol, said the higher oil prices prompted by the production cut could see a rise in output from U.S. shale gas producers. Increased supply could one again weigh on oil prices.
Associated Press
