After snuffing talks to freeze world oil production at a key meeting in the Qatari capital of Doha last weekend, Saudi Arabia said Thursday the door “remains open” to such a deal.
OPEC and nonmember oil-producing nations could revive talks to cap crude output this summer, Ibrahim Muhanna, a top adviser in the Saudi oil ministry, told the Wall Street Journal. He said the ability of the 13-member OPEC to regulate oil supplies by limiting production may be a topic of debate at the cartel’s meeting in Vienna June 2.
“The door for future cooperation remains open, and I am sure we will discuss it in June,” Muhanna told the newspaper.
OPEC Secretary General Abdallah Salem el-Badri told the Journal that the cartel is “still alive” as a force in world oil markets, despite increasing competition from the U.S., Russia and other major oil-producing countries.
Saudi Arabia, the world’s largest oil exporter and de facto head of OPEC, helped quash an earlier effort to cap output at January levels during the meeting in Doha April 17. Oil-rich nations inside and outside OPEC had floated the idea as a way to stem the global oversupply of crude, which has far outpaced demand in sluggish economies such as those in China and Europe.
Oil prices have tumbled in the past two years, to about $45 a barrel Thursday from a peak above $100 a barrel in June 2014. Producers in areas ranging from the American shale patch to the Saudi Arabian desert oil fields to the Venezuelan oil sands have seen profits plummet, while governments dependent on oil and gas tax revenue have seen their budgets dissipate. Saudi Arabia’s budget shortfall widened to $98 billion last year, prompting the country to curtail social spending programs and start draining its massive cash reserves.
Yet Saudi Arabia last weekend refused to freeze its output levels unless Iranian energy officials agreed to do likewise. Absent at the talks, Iran said it was unwilling to consider a production freeze until it boosted production by 1 million barrels a day to presanction levels.
Beyond that debate, OPEC’s Badri said the existing levels of the crude supply weighing on oil prices could balance out with demand by 2017, the Wall Street Journal reported.