Saudi Arabia calls for extension of oil supply cuts to drain stocks

Saudi Arabia is calling for an extension of the current agreement on global oil supply cuts.

The Saudi Energy minister, Khalid al-Falih told a news conference in Riyadh on Sunday that extending the supply cuts by a further nine months until next March should reduce oil inventories to the five-year average.

His statement comes ahead of an OPEC meeting on Thursday where oil producing members are expected to accept the proposal.

“Everybody I talked to … expressed support and enthusiasm to join in this direction, but of course it doesn’t preempt any creative suggestions that may come about,” al-Falih told the news conference.

“We believe that continuation with the same level of cuts, plus eventually adding one or two small producers … will be more than adequate to bring the five-year balance to where they need to be by the end of the first quarter 2018.”

OPEC members, Russia and other oil producers had originally agreed last year to cut production by 1.8 million barrels per day for six months starting January 1.

Oil prices have gained support from the reduced output but high inventories and rising supply from producers not participating in the accord, such as the United States, have limited the rally, pressing the case for extending the curbs.

Saudi Arabia and non-OPEC member Russia, the world’s top two oil producers agreed last week on the need to prolong the deal on cuts which is due to expire in June, to March 2018, pushing up prices.