Saudi Arabia’s energy minister Al-Falih says no OPEC+ output policy change until June

Saudi Arabia’s Energy Minister Khalid Al-Falih speaks during the Saudi-India Forum in New Delhi, India. (File photo/Reuters)
Updated 10 March 2019
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Saudi Arabia’s energy minister Al-Falih says no OPEC+ output policy change until June

NEW DELHI: Saudi oil minister Khalid Al-Falih said on Sunday it would be too early to change OPEC+ output policy at the group’s meeting in April and that China and the US would lead healthy global demand for oil this year.
The Organization of the Petroleum Exporting Countries and its allies such as Russia — known as the OPEC+ alliance — will meet in Vienna on April 17-18, with another gathering scheduled for June 25-26.
Falih said the group was unlikely to change its output policy in April and if required would make adjustments in June.
“We will see what happens by April, if there is any unforeseen disruption somewhere else, but barring this I think we will just be kicking the can forward,” Falih said.
“We will see where the market is by June and adjust appropriately,” Falih said after a meeting with Indian oil minister Dharmendra Pradhan in New Delhi.
OPEC member United Arab Emirates (UAE) said on Sunday it would continue to meet its obligations to cut supply under the producer agreement.
“We will continue to deliver on the OPEC & Non-OPEC commitment for voluntary production adjustments until the global market is re-balanced,” Minister of Energy and Industry Suhail Al-Mazrouei said on Twitter.
On Jan. 1, OPEC+ began new production cuts to avoid a supply glut that threatened to soften prices. The group agreed to reduce supply by 1.2 million barrels per day (bpd) for six months.
Sources recently said the most likely scenario is that the current supply cuts will be extended in June but much depends on the extent of US sanctions on OPEC members Iran and Venezuela.
OPEC’s share of the cuts is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela, which are exempt. The baseline for the reduction was in most cases their output in October 2018.
For Saudi Arabia, the world’s top oil exporter, Falih said output in April was expected to remain at this month’s level of 9.8 million bpd.
“Aramco is finalizing their April allocations today or tomorrow so we will know more on Monday. But my expectation is that April is going to be pretty much like March.”
GLOBAL OIL DEMAND
Falih said total global oil demand is set to grow by around 1.5 million bpd this year.
“If you look at Venezuela alone you would panic, if you look at the US you would say the world is awash with oil. You have to look at the market as a whole. We think 2019 demand is actually quite healthy,” Falih told Reuters.
In Venezuela, suffering from a political and economic crisis, oil exports have plunged 40 percent to around 920,000 bpd since Washington slapped sanctions on its petroleum industry on Jan. 28.
On the other hand, production in US hit a record of more than 12 million bpd in February.
The International Energy Agency last month left its demand growth forecast for 2019 unchanged from January at 1.4 million barrels per day.
Falih said Chinese demand was breaking records month after month and estimated the country would breach 11 million bpd this year.
He also said that along with China and the US, India’s expanding economy was driving global oil demand growth.
After the meeting, India’s oil minister said he wanted Saudi Arabia to play an active role in keeping oil prices at a reasonable level as rising prices affect the Indian economy.
He also invited Saudi Arabia to partner with India in building strategic oil reserves and further invest in India’s refining and Petrochemical sectors.


Saudi Arabia’s consumer prices fall in April, fourth month in a row

Updated 4 min 24 sec ago
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Saudi Arabia’s consumer prices fall in April, fourth month in a row

DUBAI: Saudi Arabian consumer prices fell 1.9 percent year-on-year in April for the fourth month in a row but were unchanged from March, data from the General Authority for Statistics showed.
The annual declines in the consumer price index are partly a consequence of a base effect that raised prices last year after the introduction in January 2018 of a 5% value-added tax (VAT), economists have said.
The annual fall in the CPI index, however, narrowed from March when the index had dropped 2.1 percent. Some economists see the narrowing of deflation as a sign that Saudi Arabia is having some success in boosting its non-oil sector, while global oil prices have remained under pressure in recent years.
“The further easing of deflation in Saudi Arabia in April suggests that stronger activity in the non-oil sector at the start of this year is (finally) feeding through to a pick-up in price pressures,” said Jason Tuvey, senior emerging markets economist at Capital Economics in a note.
Economists still expect deflation in 2019 after prices rose throughout 2018 following the introduction of the VAT, which was imposed to boost non-oil revenue in response to a long-term drop in oil prices.
Capital Economics expect Saudi CPI to fall 1.3 percent in 2019, while Abu Dhabi Commercial Bank’s projects the CPI index to decline 0.9 percent this year.
“The big picture remains that the unwinding impact of tax and administered price hikes implemented in early 2018 has revealed the weakness of underlying inflation in the kingdom,” Tuvey said.
After contracting in 2017, the economy grew 2.2 percent last year, but is forecast to grow more modestly this year.
The International Monetary Fund projects GDP growth of 1.9 percent, buoyed by an expansion of the non-oil economy as the government steps up spending. Y
The central bank chief said in February, when asked if he expected deflation this year, that he expected consumer demand and real estate loans would stave it off.
Credit grew in the first quarter by more than 3 percent, its fastest pace in more than two years, fueled by a jump in mortgages and in loans to small- and medium-sized enterprises.
Tuesday’s data showed the sub-index for housing, water, electricity, gas and fuel prices down 7.8 percent from a year earlier. The sub-index had fallen 8.1 percent in March.
Prices for food and drinks, however, rose 1 percent and prices for education rose 1.3 percent.