It’s “not unthinkable” that oil prices will rise to $60 a barrel by the end of 2016, the world’s top crude exporter said after agreeing to cut supply for the first time in eight years.
Saudi Arabia will work with other producers to determine output caps and is “optimistic” about reaching a deal by the end of November, Energy Minister Khalid Al-Falih said Monday in Istanbul. Many non-OPEC producers have expressed a willingness to work with the organization, according to the minister, who plans to meet his Russian counterpart in the next couple of days.
Ministers from some of the largest oil-producing nations are gathering at the World Energy Congress in Turkey less than two weeks after the Organization of Petroleum Exporting Countries struck a surprise agreement to rein in output. With benchmark Brent crude trading below $52 a barrel — less than half its price in mid-2014 — the budgets of oil-rich countries from Saudi Arabia to Venezuela have come under pressure.
Al-Falih said the oil market has “shifted” since 2014, when Saudi Arabia led OPEC to abandon its production ceiling in pursuit of market share.
Now it’s time to do something different, he told the congress. The group will hold its next formal meeting on Nov. 30 in Vienna.
OPEC’s framework agreement to limit output to 32.5 million to 33 million barrels a day must accommodate Libya and Nigeria, the minister said. Both nations plan to restore output lost to war and militant attacks.
Al-Falih made no mention of Iran, which has also said it wants to continue raising production after international sanctions were eased this year.
Saudi Arabia is prepared to deal with any oil price and there’s “absolutely no reason to panic” over the country’s balance sheet, Al-Falih said. The nation’s budget deficit reached 16 percent of gross domestic product last year.