Saudi Arabia's Timetable on OPEC Oil Cuts Seems to Creep Again

  • A month ago, kingdom still saw market rebalancing this year
  • Now OPEC leader is pointing to phase-out ‘sometime in 2019’

OPEC's Control of the Oil Market Is Running on Fumes

Saudi Arabia’s expectations for how long OPEC will need to persevere with production cuts seem to be shifting once again.

Last month, Energy Minister Khalid Al-Falih said that although a surplus in global crude markets could persist into 2019, “I personally believe we’ll be rebalanced by the end of 2018.”

Khalid Al-Falih

Photographer: Simon Dawson/Bloomberg

That fits with the current policy of the Organization of Petroleum Exporting Countries and Russia: their agreement to reduce supply is set to expire at the end of this year, with a gradual return of production after that.

Yet the minister’s remarks in New Delhi over the weekend indicated a subtle change. Asked when the output curbs will conclude, Al-Falih’s belief in a 2018 rebalancing seemed to be lacking: “My estimation is that it will happen sometime in 2019, but we don’t know when and we don’t know how.”

It certainly didn’t sound as if the kingdom expects to start unwinding the production cuts when the current deal ends on Dec. 31.

Delaying the phase-out of the cuts could put more strain on the oil producers’ alliance as Russian oil companies are eager to press on with new projects, while OPEC members such as Iraq, Iran and Libya want to restore or expand capacity they’ve lost.

If the kingdom’s calendar for the initiative is slipping, it wouldn’t be for the first time: in January 2017, Al-Falih said he expected the effort would be wrapped up in six months.

— With assistance by Debjit Chakraborty, and Anirban Nag

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