Exclusive: The Saudi Falih says he sees no oil shortage, but that OPEC must act if necessary

JEDDAH, Saudi Arabia (Reuters) – Saudi Energy Minister Khalid al-Falih said Saturday that he saw no shortage of oil as global oil stocks continue to rise, especially in the United States, but that OPEC will be attentive to the needs of the oil market. .

Speaking in Jeddah ahead of Sunday's ministerial meeting bringing together major OPEC and non-OPEC producers, including Saudi Arabia and Russia, Mr Falih said: told Reuters that OPEC would only decide on production in late June, when the group will meet soon.

"I'm not sure that there is a shortage of supply, but we will look at the (market) analysis. We will certainly be responsive and the market will be supplied, "said Falih, to the question of whether an increase in production was on the table because of concerns about the oil shortage.

"But everything indicates that stocks are still rising. We have seen data from the United States week after week, and it is a massive increase, so obviously there is an abundance of supply. "

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers, known as OPEC +, have agreed to reduce their production of 1.2 million barrels a day from January 1 for a period of six months, an agreement to stop stocks construction and lower prices.

"We will be flexible. We will do the right thing as we always do, "Falih said of any decision made at the June meeting to continue the cuts.

Falih said that OPEC was guided by two fundamental principles: "One to keep the market in its direction towards equilibrium, and stocks (are) brought back to a normal level. And two to meet the needs of the market. We will find the right balance, I'm sure. "

Saudi Arabia does not see the need to rapidly increase production with oil prices around 70 dollars a barrel, fearing a drop in prices and a build-up of stocks, sources said. ; OPEC. But Russia wants to increase the bid after June, when the current OPEC + pact must expire, the sources said.

The United States, which is not a member of OPEC + but is a close ally of Saudi Arabia, wants the group to boost production to lower oil prices.

Falih must strike a delicate balance between maintaining the well-supplied oil market and prices high enough to meet Riyadh's budget needs, while allowing Moscow to ensure that Russia remains in the OPEC + pact and taking into account concerns of the United States and the rest of the world. OPEC +, the sources said.

The agreed share of OPEC in the cuts is 800,000 barrels a day, but its actual reduction is much larger because of production losses in Iran and Venezuela. Both are subject to US sanctions and are excluded from voluntary reductions resulting from the agreement with OPEC.

US President Donald Trump has called on Saudi Arabia, OPEC and the group leader, to lower oil prices.

Sunday's ministerial group meeting, known as JMMC, comes as the market is tight, Iranian oil exports are expected to fall further in May, and shipments from Venezuela may fall further in the coming weeks because sanctions imposed by Washington.

Oil contamination has also forced Russia to interrupt flows along the Druzhba pipeline – a key crude oil vector in Eastern Europe and Germany – in April. The suspension, whose duration remains uncertain, left the refiners struggling to find supplies.

But US crude inventories rose unexpectedly last week and reached their highest level since September 2017, while gasoline inventories fell more than expected, the Energy Information Administration (EIA) announced on Wednesday. [EIA/S]

Tensions between Saudi Arabia and OPEC member Iran are also exacerbated after last week's attacks on two Saudi oil companies off the United Arab Emirates and another against Saudi oil facilities inside. of the Kingdom.

Saudi Arabia has accused Iran of ordering the attack on Saudi oil tanker Aramco's pumping stations claimed by the Houthi militia aligned with Iran and Yemen.

A technical committee of OPEC and non-OPEC countries found that oil producers' compliance with the supply-reduction agreement reached 168 percent in April, three sources told Reuters on Saturday. .

This shows that OPEC + producers reduce their production more than their share. Saudi Arabia has been pushing its production target since January to keep oil stocks and prices under control.