Saudis Optomistic | Russell T. Rudy Energy LLC
“Rigzone” reports that Saudi Oil Minister, Kalid Al-Falih, is confident that all the parties to the recent production cutback agreement will comply, demand will pick up, the global oil glut will disappear, and the market will re-balance by the end of the second quarter. If all this happens, prices will recover and he sees no need for extending the agreement beyond its June 30 term.
All of this might seem like unfounded optimism, especially given the history of compliance with production quotas. Al-Falih does hedge his bets somewhat saying, “Of course there are many variables that can come into play between now and June, and at that time we will be able to reassess.”
The first reassessment however might come later this month when the OPEC nations and the 11 other countries who are parties to the cutback agreement meet in Vienna to monitor compliance with quotas. Nevertheless, Al–Falih is confident the agreement will hold, noting that many countries are ‘going the extra mile’ and making deeper cuts than agreed.
Saudi Arabia certainly appears ‘all in’ with its commitment to production quotas and is ‘going the extra mile’ itself. The Desert Kingdom had agreed to cut its output by 486,000 barrels of oil per day (bopd) to 10.058 bopd. However, the Saudis are currently producing less than 10 million bopd. As Al-Falih observes, “We will strictly adhere to our commitment and be at our cap, or as is the case now, slightly below it.”
To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=148123&utm_source=DailyNewsletter&utm_medium=email&utm_term=2017-01-16&utm_content=read&utm_campaign=feature_1 .
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