Saudi energy minister: Opec needs to make sure we dont crimp

too tightly
10 octubre 2016
https://www.ft.com/content/d64d71fc-ef85-319d-9caa-4d36a555eac3
Saudi Arabias energy minister Khalid Al Falih said on Monday any Opec
curbs on production by the end of the year should not be too severe,
dampening prospects of a big cut to output to bolster prices.
Opec needs to make sure we dont crimp too tightly and create a shock
to the market. We are going to be very responsible, Mr Falih said at the
World Energy Congress in Istanbul, Anjli Raval reports.
Last month Opec in Algiers reached an agreement to cut output to
between 32.5 and 33m barrels a day. Details for a binding deal need to
be ironed out by the next ministerial meeting of the body in November.
Prices have dropped too low and that has impacted investment. Many
companies and countries are hurting we dont want to give the market
the wrong signal and shock the markets prices, he said, according to
Reuters.
Saudi Arabia, Opecs defacto leader and largest producer, has said it
would back a coordinated cut in production should regional rival Iran
freeze its production. Opec delegates hope that an agreement between
the 14 members of the group to bring down its production may pave the
way for involvement from non-Opec countries such as big producer
Russia.
But major hurdles to achieving a deal remain. How any cut to production
would be split between Opec has yet to be decided. Although Iran has
agreed to cap its output, the level has not been agreed. Iraq in recent
weeks has only spoken about ramping up production.
Although some market observers have said the latest accord has shown
a shift in the Saudi-led Opec strategy after two years of not limiting
output to buoy prices others have said the body is unlikely to achieve
the ambitious task of uniting the group.
Should a big cut of at least 1m b/d not take place, delegates and market
analysts say any reduction will not make a meaningful difference to
easing excess supplies that have taken prices to more than half their
levels of mid-2014.
Mr Falih will be meeting with his Russian counterpart in Istanbul. Country
delegations are expected to meet again in Vienna later this month.

Delegates do not expect any deal to be reached in Istanbul.

The Congress is an opportunity for countries to come together, and a
deal is still being worked on. But lets be realistic, not every Opec
country will be present. We dont want to hype up the situation. Some
countries are trying to prop up the market by saying otherwise, said
one Opec delegate.
Mr Falih added:
It is time to do something different than we faced in 2014. It is a very
gentle hand on the wheel, we are not doing anything dramatic.
The difference is that the market forces have shifted significantly
between 2014 and now.