Saudi Arabia Doesn’t Plan to Deepen its Oil Production Cuts

Oil markets are “healthy,” eliminating the need for Saudi Arabia to increase its deeper-than-agreed production cuts, the kingdom’s energy minister said.

Saudi Arabia is leading OPEC and partners including Russia in cutting production to shore up prices. Oil is up about 30 percent this year after the strongest quarterly performance in five years. But the group, known as OPEC+, remains committed to reducing an inventory glut which is still 70 million to 80 million barrels too high, Al-Falih said.

The kingdom will pump about 9.8 million barrels a day in March and April and export less than 7 million barrels daily in both months, Al-Falih said in March. Saudi Arabia has a production target of 10.3 million barrels a day.

OPEC+ plans a meeting in May to assess the group’s compliance. This will be a “key” gathering, Al-Falih said, but it’s still “premature” to decide whether they will extend oil cuts into the second half of 2019. “We are driven by inventories,” he said, and OPEC+ will agree on what to do next during its June meeting.

Here are other highlights from the interview:

Investor demand for Saudi Aramco’s debut dollar bond has exceeded $30 billion, he said. The securities, which haven’t priced yet, will be the first of many debt offerings by the company. Al-Falih said he still hopes that Saudi Arabian Oil Co., as the company is formally known, will proceed with an initial public offering in 2021. Aramco will have a “permanent presence” in capital markets, Al-Falih said, and in a couple of years investors will be able to buy either the company’s stock or bonds.