Saudi Arabia guns for extending oil production cuts

Saudi Arabia’s Energy Minister Khalid al-Falih indicated that he is in favour of extending oil production cuts in the second half of 2019. This is despite US President Donald Trump demanding that oil prices be kept low.

In January 2019, OPEC countries along with major oil producers in the world began implementing a six-month deal to cut output by 1.2 million barrels per day to reduce supply and increase prices.

Although the deal aims to push oil prices higher, prices continue to remain below their multi-year peak of US$85 per barrel which it touched in October, last year. This has increased speculation that the deal to cut production could be extended.

Falih said that the oil producing countries are taking a slow and measured approach and that market stability remains their foremost priority. OPEC production fell to a four year low in January. Oil prices had crashed below US$30 per barrel down from over US$100 per barrel due to a glut in supplies and weak global demand.

A lack of adequate investments in oil and gas which is expected to be US$11 trillion by 2040 as per OPEC would lead to supplies falling short of demand.