With less than three weeks to go before a pivotal OPEC meeting, Gulf ministers emerged Saturday from a hastily arranged meeting tight-lipped on whether they would seek to increase crude oil output in the second half of the year to make up for potential shortfalls from Iran and Venezuela.
Saudi Arabia’s energy minister Khalid al-Falih met with his counterparts Bakheet al-Rashidi from Kuwait, Suhail al-Mazrouei from the UAE, along with Mohammed al-Rumhy, oil and gas minister from non-OPEC producer Oman, according to a statement released by Kuwait’s Kuna news agency on Sunday.
The “unofficial consultative meeting,” hosted in Kuwait City came after OPEC kingpin Saudi Arabia and non-OPEC producer Russia signaled that the production cut agreement could wind-down earlier than planned.
OPEC and 10 non-OPEC producers, led by Russia, were expected to maintain 1.8 million b/d of supply cuts through to the end of 2018, but the group has come under pressure from consumers due to rising prices.
Kuwait, Saudi Arabia and the UAE are among the few OPEC members who could raise output quickly, but the ministers were tight-lipped and would not confirm if they had discussed possible increases to production.
In a statement to Kuna, the ministers stressed the need to “maintain the existing cooperation and continue the successful endeavor carried out by the participating countries.”
They also called for “sustaining the current partnership in order to continuously adapt to ongoing market dynamics in pursuit of the interests of consumers and producers.”
The OPEC alliance has lowered stocks close to its five-year average goal much quicker than expected, due to supply outages in Venezuela and strong compliance to the 1.8 million b/d output cut deal.
The group’s Joint Ministerial Monitoring Committee said compliance was 152% for April. It also estimated that OECD crude oil inventories had fallen 20 million barrels below the five-year average for the first time since the output cuts began.
The next formal meeting of the JMMC will be held on June 21 in Vienna, just ahead of the main OPEC meeting. With its inventory goals achieved, the group will meet June 22 in Vienna to discuss the deal, amid speculation that it may have to increase output to make up for any Iranian barrels shut-in due to the US’ decision to reimpose sanctions. Venezuela, a major OPEC member whose production is already in decline, also faces the prospect of additional US sanctions