RIYADH, Saudi Arabia - Saudi Arabia’s oil minister has confirmed in a press conference that a number of major crude-producing countries reached an initial agreement to extend output cuts, as persistently high stockpiles weigh on prices.
Saudi Arabia’s Khalid Al-Falih said in Abu Dhabi that after three months of limiting production, OPEC and other major suppliers have failed to achieve their target of reducing oil inventories below the five-year historical average.
Al-Falih didn’t specify the number of countries in the initial deal for an extension.
Earlier in January, oil producers pledged to reduce output for six months.
Al-Falih added, “Although there is a high level of commitment, we haven’t reached our goal, which is to reach the five-year average. There is an initial agreement that we might be obligated to extend to get to our target.”
He added that countries participating in the cuts are yet to reach a consensus on prolonging their agreement into the second half of the year.
Adding that an extension wouldn’t necessarily be for an additional six months.
In December last year, the Organization of Petroleum Exporting Countries and other producers including Russia agreed to pump less oil in an effort to counter a global glut.
Data from Baker Hughes Inc. show that output shows signs of rebounding in the U.S., where explorers have added rigs for the past 13 weeks.
OPEC Secretary-General Mohammad Barkindo has said that in a meeting scheduled to be held on May 25, OPEC will decide whether to prolong its pledged cuts into the second half.
Meanwhile, Oman Oil Minister Mohammed Al Rumhy confirmed in a statement that Gulf Cooperation Council countries have agreed to push for an extension of cuts.
OPEC members in the GCC include Saudi Arabia, Kuwait, Qatar, United Arab Emirates, Oman and Bahrain and all these nations are participating in the current deal to cut output.
Al Rumhy added that other members of the OPEC, including Iran and Venezuela have expressed support for an extension of the production cuts.
Kuwait Oil Minister Issam Almarzooq told reporters, Iran’s oil minister made a commitment to freeze output at 3.8 million barrels a day for the rest of the year on the assumption the cuts are extended beyond June.
Almarzooq however added that OPEC and Russia haven’t reached a final agreement on extending output limits.