Leading Gulf oil producers Saudi Arabia and Kuwait gave the clearest signal yet that OPEC plans to extend into the second half of the year a deal with non-OPEC producers to curb oil supplies.
“I expect we will have an extension of the agreement,” Kuwait’s oil minister Essam al-Marzouq said at a Gulf industry forum with five other Gulf energy ministers.
“We have a noticeable increase in compliance from non-OPEC which shows the importance of extending the agreement,” Marzouq said.
OPEC is keen that non-OPEC play its part in reducing world inventories to support a price rise that has stalled near $55 a barrel. Crude is up from lows last year below $30.
OPEC meets on May 25 to discuss extending supply curbs with non-OPEC countries that total 1.8 million barrels daily, two-thirds of that from OPEC.
Saudi Oil Minister Khalid al-Falih, speaking at the same event, said there was “an initial agreement” that the oil cuts may need extending to drain high global inventories. He said talks were ongoing.
“Our target is the level of inventories. This is the main indicator for the success of the initiative,” Falih said.
While inventories held at sea and in producer countries have dropped, they remain stubbornly high in consumer regions, particularly in Asia and the United States.
The International Energy Agency said last week that inventories in OECD countries were still 10 percent above the 5-year average, a key gauge for OPEC.