Al-Naimi: OPEC deal has potential to balance oil market

05/12/2016 05:08 AST

OPEC’s agreement to cut production for the first time in eight years has the potential to balance the oil market, as long as everyone sticks to it, former Petroleum and Mineral Resources Minister Ali Al-Naimi was quoted as saying in a Bloomberg report.

“The only tool they have is to constrain production,” Al-Naimi said of OPEC at an event in Washington.

OPEC recently agreed to cut production by 1.2 million barrels a day, while Russia and other oil producers committed to reducing their own output by another 600,000.

According to Bloomberg, Al-Naimi also that said he was not opposed to production cuts in 2014, as long as everyone participated. They would not, he said.

“There’s not much you can do if there is no maximum cooperation between the producers,” said the former minister.

He also expressed skepticism that Russia, considered a wildcard during talks, would follow through on its promise to reduce output. “Will Russia cut 300,000?” he said. “I do not know. In the past, they did not.”

Saudi Arabia still has production potential, Al-Naimi said in the report. Technology

During a panel discussion with Hess Corp. CEO John Hess and former Schlumberger CEO Andrew Gould, Al-Naimi said that Saudi Arabia has untapped shale oil and gas reserves, and advancing technologies would only bring shale production costs lower.

Two sources earlier told Reuters that OPEC will meet non-OPEC countries to finalize a global oil limiting pact on Dec. 10 in Vienna.

OPEC hopes non-OPEC countries will contribute another 600,000 bpd to the cut. Russia has said it will reduce output by around 300,000 bpd.

Arab News